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Assume that demand for ore is given by P = 150-Q, and supply by P=8, discount rate is 15% and the amount of available resource
Assume that demand for ore is given by P = 150-Q, and supply by P=8, discount rate is 15% and the amount of available resource is 75 tons. We assume that there are only two periods: this year (period 0) and the next year (period 1). We also assume that demand and supply in period 1 are the same as in period 0. Find dynamically efficient extraction profile, i.e quantity extracted in each period as well as the prices in both periods. Show all your work.
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