Consider the intertemporal allocation of a nonrenewable resource (NRR) between two periods, 1 and 2. The...

 

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Consider the intertemporal allocation of a nonrenewable resource (NRR) between two periods, 1 and 2. The inverse supply and the inverse demand for this NRR are the same in both periods and are 70 40 respectively given by P= 10 +- and P= 120-- with Q, and P, denoting the quantity and the price in period i = 1, 2. The discount rate is 10% per period and the quantity of the NRR is Qmax = 179. Determine generation 1's marginal net benefit, MNB. Determine the static equilibrium price in period 1, i.e., the price P when generation 1 does not consider its impacts on generation 2. Determine generation 2's marginal net benefit expressed in present value. Determine the (dynamic) equilibrium price in period 1, i.e., the price P when generation 1 considers its impacts on generation 2. Determine social marginal cost curve in period 1. Determine the unit depletion tax that should be imposed in period 1 to ensure the efficient extraction of the NRR in period 1. Consider the intertemporal allocation of a nonrenewable resource (NRR) between two periods, 1 and 2. The inverse supply and the inverse demand for this NRR are the same in both periods and are 70 40 respectively given by P= 10 +- and P= 120-- with Q, and P, denoting the quantity and the price in period i = 1, 2. The discount rate is 10% per period and the quantity of the NRR is Qmax = 179. Determine generation 1's marginal net benefit, MNB. Determine the static equilibrium price in period 1, i.e., the price P when generation 1 does not consider its impacts on generation 2. Determine generation 2's marginal net benefit expressed in present value. Determine the (dynamic) equilibrium price in period 1, i.e., the price P when generation 1 considers its impacts on generation 2. Determine social marginal cost curve in period 1. Determine the unit depletion tax that should be imposed in period 1 to ensure the efficient extraction of the NRR in period 1.

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Generation 1s Marginal Net Benefit MNB MNB is the difference between the price of the NRR and the marginal cost of extracting it In this case the marg... View the full answer