What is the efficient allocation between the two periods

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Reference no: EM131083742

Suppose that there is a total of 40 units of a non-renewable resource that will be completely depleted in two periods. This resourve has a demand curve Q= 100=2P in each period and a constant marginal extraction cost of $10. Assume the interest rate in the economy is 10%.

A) Draw the marginal net benefit curves.

B) What is the efficient allocation between the two periods?

C) What is the price in each period? What is the marginal user cost?

Reference no: EM131083742

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