|Feb22-10, 11:52 AM||#1|
In a 2-period economy, the initial stock of an exhaustible resource is given with S0 = 20,000. The marginal propensity to pay is given by:
mpp(xt) = 10 - xt/2000
The costs of supply are c = 1. The social discount rate is given by r = 0.1.
Calculate the optimal extraction of the resource and the corresponding market prices.
Thanks for your help.
|costs of supply, exhaustible resource, initial stock, marginal propensity, social discount rate|
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