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1. Now assume the following specific demand equation: p = 9 – 0.3q; r = 0.1; R= 80; mc = 2. Suppose the resource price is currently $3 per unit. What is the depletion year for this resource under perfection completion? (Note: you may need to carry out some calculations in a spreadsheet).
2. Given the information provided in question 1,
a) What is the equation of MR?
b) What is the specific MR corresponding to the initial point characterized by p = 3?
c) Compute the optimal depletion year.
Assume demand is given by: Qd = 80 - 4p. Assume supply is given by Qs = 40. What is the elasticity of supply? What is the market equilibrium?
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