Chapter 10: Dynamically efficient extraction Po- MCO= 1 (1+r) Pi MC,) Prove that the equal production profile (q0 = q1) does not satisfy the condition for intertemporal efficiency. In other words, the dynamically efficient production profile involves a "tilt" toward the present, in the sense that extraction in the first year q0 exceeds that of the second year q1. (a) Period 0 Period 1 MCo MC1 Po - Do P1 - - - - D1 $ $ 150 150 Quantity in present period Quantity in next period (b) Period 0 Period 1 MCo MC1 Po -.." Do P1 ..... . D1 $ $ Quantity in present period Quantity in next period