Suppose the inverse demand function for a depletable resource is linear, P = 25-0.4q,and the marginal supply cost is constant at 5.

1. If 40 units are to be allocated between two periods in a dynamic efficient allocation, how much would be allocated to period 1 and how much to period 2 when the discount rate is r = 0.15? Show your working (equations are not included in the word count).
2. ii. What is the marginal user cost in each period? Provide a one-sentence economic interpretation.
3. Show in a diagram how the marginal user cost would change if an energy price shock were to raise the marginal cost in period 2 to 10 (diagrams are not included in the word count).