4 Depletable resource 2 Suppose we are analyzing the intertemporal allocation of oil. Assume a generation is 35 years, and we are concerned with only two generations. The demand and supply functions for oil in the present generation are given by: Demand: Qd = 200 - SP or P = 40 - 0.2Qd Supply: Q = SP or P = 0.2Qs where Q is expressed in millions of barrels and P is the price per barrel. a) Draw a supply-and-demand graph showing the equilibrium price and quantity consumed in this generation in the absence of any consideration of the future. Solve for the equilibrium price and quantity algebraically. b) Next, draw a graph showing the marginal net benets from consumption in this period at all levels of consumption up to the equilibrium level. Express the marginal net benet function (benet minus cost) algebraically. c) Suppose that the marginal net benet function is expected to be the same for the next generation. But there is a discount rate (interest rate) of 4 percent per year, which for 35 years works out to be approximately equal to 4, or (1.04)\". Total oil supply for both generations is limited to 100 million