How much would be allocated to each period

Reference no: EM132208345

Question: Suppose that that inverse demand function for a depletable resource is given by:

p = 10 - q

where p is the price and q is the quantity. Assume that 6 units of the resource are available to be allocated between two periods. Assume that the marginal cost of supplying the resource in each period is $4. (there is not given discount rate in this question)

a) In a statically efficient allocation, how much would be allocated to each period? Draw a diagram to explain your results.

b) In a dynamically efficient allocation, how much would be allocated to each period? Draw a diagram to explain your results.

c) How would each of the following affect the dynamically efficient resource allocation? Draw a diagram to explain your results.

i An increase in the discount rate.

ii An increase in the total supply of the resource.

Reference no: EM132208345

Questions Cloud

What is the portfolio beta and portfolio standard deviation : You have an investment that consists of 3 stocks. Stock 1 is worth $22,000 with a beta of 0.97. Stock 2 is worth $7,500 and has a beta of 1.2.

Find the partial market equilibrium price and quantity : Suppose the generators described below compete as price takers in a market with perfect competition and a price-dependent demand given by PD = -20p + 400.

What are the mean and standard deviation values : Suppose that you are creating a model to manage uncertainty and one of those uncertain variables in your model is X. You know the distribution of X is normal.

Implement a simple currency converter program : Write a program (with c only) to implement a simple currency converter program.

How much would be allocated to each period : In a statically efficient allocation, how much would be allocated to each period? Draw a diagram to explain your results. In a dynamically efficient allocation.

Design and implement a class for double link list to hold : DList.h declares the class DList and Node. You can make DList the friend of Node so it can access the private data of the Node.

What is the difference between dominate and recessive genes : What is the difference between dominate and recessive genes? What is the difference between heterozygous and homozygous expression of genes

Explain two potential problems involved in using the cvm : Explain two potential problems involved in using the contingent valuation method (CVM). Explain what makes this method attractive.

Write an equation representing expected value of buying car : Write an equation representing the Expected Value (EV) of buying a car. If the proportion of cars that are high quality is 0.2, would there be a market for.

User Account

All Pages