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Q. Suppose that the total stock, S0, of a nonrenewable resource is 15 units. The quantity demanded of the resource in each year is given by the equation Qt = 10 - Pt . The marginal cost of extraction is zero. The discount rate is 10%. I need to find what the efficient quantity to extract would be and what would be the net benefit for society. The resource will only be useful in t=0 and there will be no demand for it after t=0.
What is the market solution (market price and quantity) and What is the total surplus of the society under the market solution
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