find the equilibrium quantity and demand curve, Microeconomics

Consider a non-renewable resource. There are two periods, now and later. The demand curve in each period (t = 1, 2) is Qt = 10 - Pt. The stock of the resource is 10 units. Extraction costs are approximately zero. The interest rate is 4 percent.

(a) A market equilibrium requires identifying price and quantity at all times. What are the four variables for which we need to find numerical values to find the equilibria?

(b) To find these four unknowns, we need four equations. These equations are (i) the two demand curves, (ii) the Hotelling price path, and (iii) a summing-up condition that says that the quantity used in both periods sums to the stock. Write down those four equations.

(c) Solve the four equations by substitution to find the equilibrium quantity harvested in each period and the equilibrium market price in each price. What is the solution (round your answers to two decimal places).

 

Posted Date: 2/19/2013 5:16:03 AM | Location : United States







Related Discussions:- find the equilibrium quantity and demand curve, Assignment Help, Ask Question on find the equilibrium quantity and demand curve, Get Answer, Expert's Help, find the equilibrium quantity and demand curve Discussions

Write discussion on find the equilibrium quantity and demand curve
Your posts are moderated
Related Questions
Difference between accounting profit and economic profit: The difference between accounting profit and economic profit is that economists include in total cost of production b

what are the similarities and differences of marginal productivity and marginal utility

Effects of weight loss A healthy body is required not only for the sake of health, but also for maintaining the standard frame of a body. A person experiencing the problem of weigh

What is the difference between a change in demand and a change the quantity demanded?  There is a distinction among demand and quantity demanded. Demand explains the behavior o

Show the possible outcome of setting a minimum wage for under-eighteens. Explaining and illustration of minimum wage - clearly set above market equilibrium outlining res


#suppose EEPCO is amultiplant monopolist with two plants: Gibe plant and Fincha plant. The operating costs of the two plants are: Gibe plant Tc1=10Q^2 and Fincha plant TC2=20Q^2.

The prevention of major swings in economic activity can be handled most easily by the

Aggregate Demand For Wheat The demand for U.S. wheat is comprised of domestic demand and export demand. The domestic demand for wheat can be given by the equation: -QDD =

Risk Premium - The risk premium is amount of money which a risk averse person would pay to keep away from taking a risk. *  Risk Premium: A Scenario - The person has a 5%