2. Given a two period model and an inverse demand curve for a depletable resourc

Question

2. Given a two period model and an inverse demand curve for a depletable resource is P= 10 - 0.2q and the Marginal Cost is constant and equal to 3. a)What is the static efficient level of consumption for the resource? b)If the discount rate is zero, how should you allocate 10 units of the resource across two periods? c) what is the marginal user cost in each period? d)If the discount rate is greater than zero, how would this affect your distribution? e)If the discount rate is greater than zero, does the idea of strong sustainability conflict with the idea of efficiency?

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faculty.lebow.drexel.edu/HammoudehS/Econ_351/homework.doc

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