Question
Consider the N-Period, Constant-(Marginal)Cost, No-Substitute Case presented on page 141. Assume that TB=8q-0.1q2 , TC=2q, r=8.22%, and that 13 units of resource have to be
Consider the N-Period, Constant-(Marginal)Cost, No-Substitute Case presented on page 141. Assume that TB=8q-0.1q2 , TC=2q, r=8.22%, and that 13 units of resource have to be allocated so as to achieve a dynamically efficient allocation.
a. How long will the resource last?
b. Show that in each period the total marginal cost is equal to the price.
c. Show that the marginal user cost is increasing over time.
d. How would your answer to point a change if the discount rate was 17.94% rather than 8.22%?
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The World Economy Geography, Business, Development
Authors: Frederick P. Stutz, Barney Warf
6th edition
321722508, 321722507, 978-0321722508
