Posted: March 6th, 2017

In the numerical example given in

the text, the inverse demand function for the depletable resource is P = 8 –

0.4q and the marginal cost of supplying it is $4. (a) If 40 units are to be

allocated between two periods, in a dynamic efficient allocation how much would

be allocated to the first period and how much to the second when the discount

rate is zero? (b) What would be the efficient price in the two periods? (c) What

would be the marginal user cost in each period? Submit your answers, showing all

work, to the assignment dropbox.

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