Consider the allocation of a delectable resource over two


Consider the allocation of a delectable resource over two periods. There are Qbar=4 units of the stock available. The total benefits derived from using the resource are defined as TBt= 20qt- (1/2qt^2) and the total cost of extracting the resource is defined as TCt=5qt

What are the values of q0 and q1 that maximize the net benefits of using the resource if the discount rate is 10%? What if the discount rate is 5%?

Now suppose there are Qbar = 30 units of the stock available. How do the answers to part (a) change? What is your intuition?

What is the shadow price in period zero?

Request for Solution File

Ask an Expert for Answer!!
Business Economics: Consider the allocation of a delectable resource over two
Reference No:- TGS01133037

Expected delivery within 24 Hours