Question 3. Renewable Backstop (25 points) Consider the efficient allocation of a fossil fuel resource when marginal extraction costs are increasing exogenously over time and stable demand over time. a. On two separate figures, depict (1) the quantity of the non-renewable resource used in each period and (2) the price of the non-renewable resource in each period along the efficient extraction path under the assumption that the resource is exhausted along the efficient extraction path. This is "Model 2" from Lecture 9. (10 points) c. Suppose that a renewable technology was developed that could replace the use of the fossil fuel energy at a marginal cost, MC", that is greater than the current marginal extraction cost. Using the figure from part (a.), depict how the development of this renewable backstop technology would change the following quantities when the transition to the backstop technology occurs before the resource is exhausted. Explain the economic intuition for each result: i. The marginal user cost in period t = 1. (5 points) ii. The quantity of the resource extracted and consumed in each period. (5 points) iii. The time that resource extraction ends. (5 points)