ECO200 subject

Suppose the inverse function of demand for an exhaustible resource is linear, P = B-0.4q, and the marginal cost of supply is constant at 2. i If 20 units are allocated between two periods in a dynamic efficient allocation, when the dizcount rate is r = 0.1, how many will be allocated to pericd 1. and how many to pericd 27 Show your work 2. 'What iz the marginal user cost in each period? 3. If an energy price shock raises the marginal cost of period 2 1o 4, how will the marginal user cost cha