Monopoly and natural resource prices Suppose that a firm is the sole owner of a stock of a natural resource.

a. How should the analysis of the maximization of the discounted profits from selling this resource (Equation 17.63) be modified to take this fact into account?

15M. S. Kimball, “Precautionary Savings in the Small and in the Large,”

Econometrica (January 1990): 53–73.

b. Suppose that the demand for the resource in question had a constant elasticity form q 1t2 5 a 3p 1t2 4 b

. How would this change the price dynamics shown in Equation 17.67?

c. How would the answer to Problem 17.7 be changed if the entire crude oil supply were owned by a single firm?