Question: Solve clearly Question (25 marks) Consider a two-period model of a mineral industry consisting of a single firm. Demand in each period is P =

Solve clearly

Question (25 marks) Consider a two-period model of a mineral industry consisting of a single firm. Demand in each period is P = 300 - 2.5q. Supply is MC = 60 + 0.5q The market interest rate is 0.15 (15%) The social discount rate is 0.5 (50%) . t = 0, 1; P and MC are in $/unit and q is in units Suppose that there is an unlimited amount of the resource in existence. a) How much would the monopolist choose to extract in each period? (4 marks)

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