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The metals producer Soci-Etain has acquired rights to a deposit of tin in Ecuador. According to the company geologists, there are 20,000 units of tin

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The metals producer Soci-Etain has acquired rights to a deposit of tin in Ecuador. According to the company geologists, there are 20,000 units of tin in the deposit. The estimate of the cost of extraction and smelting of the tin in each period is C(Y,) =25x Y, +0.005xY, , where Yt represents number of units of tin extracted/smelted in period 't = 0, 1, 2..." The world market price of a unit of tin is $100. This is not expected to change for at least five years. The return (proxy for interest rate) that Soci-Etain can earn on its other assets around the world is 4%. 19. Which of the following changes will REDUCE the amount of tin ultimately abandoned (will INCREASE the amount extracted) from the deposit in Peru? A. Return on other assets (interest) decreases to 3% B. Price of tin falls to $80 C. Cost of extraction/smelting rises to C(Y,) =30x Y, + 0.008x Y? D. Return on other assets (interest) increases to 5% E. Lease on the deposit is increased from two years to three years

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