(a) What is the quantity of the resource constraint (i.e., how much resource is available over these two periods) __________________________________________________ 

(b) What area maximizes the total net present value of Period 1 and 2 (using labels from the figure)? _______________________ 

(c) If the Marginal User Cost (MUC) in period 1 is $1.92, what is the price in period 2 of the gold?______________________________________ 

(d) What is the present value of net benefit in Period 1 if 15 units of gold were consumed in this period? ________________________________________ 

(e ) What is the present value of net benefit in Period 1 if 5 units were consumed in this period? ____________________________________

Transcribed Image Text:

Using the two period model below for which Marginal Extraction Cost (MEC) of gold extraction is 2, inverse demand curve is PP = 8 -0.4QQ, and discount rate is rr = 0.1. Please fill in the following blanks using the figure below and information provided. (a) [1 pts] What is the quantity of the resource constraint (i.e., how much resource is available over these two periods)? Using the two period model below for which Marginal Extraction Cost (MEC) of gold extraction is 2, inverse demand curve is PP = 8 -0.4QQ, and discount rate is rr = 0.1. Please fill in the following blanks using the figure below and information provided. (a) [1 pts] What is the quantity of the resource constraint (i.e., how much resource is available over these two periods)?

Answer rating: 100% (QA)

a The quantity of the resource constraint is 10 b The area that maximizes the total net present valu... View the full answer