Suppose that there is a total of 40 units of a non-renewable resource that will be completely depleted in two periods. This resourve has a demand curve Q= 100=2P in each period and a constant marginal extraction cost of $10. Assume the interest rate in the economy is 10%.
A) Draw the marginal net benefit curves.
B) What is the efficient allocation between the two periods?
C) What is the price in each period? What is the marginal user cost?