4. Suppose the demand equations for oil are po = 10-0.20Q in the current pe- riod and...
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4. Suppose the demand equations for oil are po = 10-0.20Q in the current pe- riod and p = 30-0.50Q, in the future period. Marginal extraction cost is $1 per bbl in the current period and $2 per bbl in the future period. Determine the efficient prices and extraction in both periods and net social benefit when the oil reserve is 80 bbl and the discount rate is 10 percent.
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Kirti Kaushal
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