Hi,

I am studying Optimal Extraction and am having trouble with this particular question. I believe my methodology is correct, however I seem to be getting inconsistent answers. My lecturers are away for easter break and I am looking to find the correct answers and solutions to these problems. The potential answers are highlighted for each particular part of the question.

Thank you

The total quantity of natural resources to be extracted is 200 units, the nancial rate of return is 15%pa, the population growth rate is 30%pa, the price now is $60 per unit, the price in 1 year is $80 per unit and the marginal extraction cost now and in 1 year is $40 per unit and $50 per unit respectively. How many units should be extracted now? *126,100, 0 or 35*? Additionally: imagine the government introduces an extraction permit [i.e., the firm needs to buy a permit for all units extracted] which effectively causes 25 units to be extracted later rather than now. [fthe permit is only used now and not later, then how much does the permit cost? *$1, $2, $3, sg Additionally: imagine there is no permit introduced, and the firm explores in year 1 {later}. Each trip to look for new resource's costs $400. The chance ofnding 500 units of new resources is 20% we will assume 96 units are extracted in year 1. How many trips should be taken? *1.2.3.4-L* Finally: imagine there is no permit introduced, and the government introduces a subsidy so that only 80 units of resources are extracted now. When does the government introduce the subsidy and how much is it? *$25 in 1 Year, $18 in 1 year, $25 now or $18 now}