Problem: You are the owner of a nonrenewable resource. Your economics intern crunched the numbers for you and came back with an initial price of$175.26. You had given the intern the following information:
Demand is linear: a = 200, b = 3
Marginal extraction costs are constant: C = $15
The interest rate is 5%
You have an initial stock of 140 units
Is the intern correct? Fully explain. Note that if the intern is not correct, you do NOT have to determine the correct initial price.