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Suppose that there is a total of 40 units of a non-renewable resource that will be completely depleted in two periods. This resourve has a demand curve Q= 100=2P in each period and a constant marginal extraction cost of $10. Assume the interest rate in the economy is 10%.

A) Draw the marginal net benefit curves.

B) What is the efficient allocation between the two periods?

C) What is the price in each period? What is the marginal user cost?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91821684

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