Assume again that we have a simple 2 period model of dynamically efficient extraction of a nonrenewable resource with a finite stock of 35 units. Constant marginal extraction costs remain at 8. And the interest rate is 8%. We now know that due to technological change, demand for the resource will decrease in period 2. Hence, there are now different demand functions for each period. In particular, inverse demand functions for the 2 periods are: P1= 20- 0.4q1 P2= 22- 0.4q2

A small countertop installing company hires you to estimate their customers weekly demand function for marble (per sq ft). The demand function is as follows: Qm=5000-30Pm +20Pg + 0.05Inc m=marble, g= granite, inc = avg disposable income for home improvements in the surrounding area. Current prices: marble = 40, granite = 25 and disposible income = 5000 Suppose during the supply change shortage the price of marble triples to $120 Determine the elasticity of demand at the new market price for marble

Think the two-period model for a depletable resource such as coal. Period 1 is current time and period 2 is future, a year later. Annual discount rate is 50%. The (inverse) demand function for period 1 is P=27-Q and its marginal (extraction) cost is constant 3. The (inverse) demand function for period 2 is P=15-0.5Q and its marginal (extraction) cost is constant 3. Suppose the supply of coal is limited to 30 units. The dynamically efficient quantities and prices are Q₁= period 1 and Q2= and P2= and P1= for period 2. Hint: Round numbers to one decimal place. for

If demand function is given as the following:  Qz = 230 -2.75 Pz + 0.5 I + 1.2 Pm + 0.6A  Where Qz is quantity of Good z sold, Pz is price of Good z per unit, I is per capita income, Pm is price of competitor and A is the amount of advertising spent.  Current values:  Pz= RM 55 I= RM 9000    Pm= RM 50    A =RM 12,000 a) Should the firm consider giving a price discount in order to increase total revenue?

Think the two-period model for a depletable resource such as coal. Period 1 is current time and period 2 is future, a year later. Annual discount rate is 5%. The (inverse) demand function for period 1 is P=27-Q and its marginal (extraction) cost is constant 3. The (inverse) demand function for period 2 is P=15-0.5Q and its marginal (extraction) cost is constant 3. Suppose the supply of coal is limited to 30 units. Marginal net benefit for period 1 is MNB1= Q1. Marginal net benefit for period 2 is MNB2= Q2. Hint: Remember you are not discounting marginal net benefit in period 2 yet.

Suppose the Marginal Benefit and Marginal Cost for crude oil at any given period is:    MB = 159 - 2.1Q  and MC=36 + 0.9Q Where price is measured in dollars and quantity is measured in barrels. The total oil reserve is 50 tons. What is the Optimal barrels of oil that should be extracted in the current period (suppose we don’t need to be concerned with any future periods)?

2. A company supplies a product at two mutually exclusive (do not happen at the same time) periods of time. The demand function for Period 1 is P₁ = 800-20₁ and the demand function for Period 2 is given by P₂ = 760-202. The cost for each unit provided is 40 per unit (paid in both markets). Capacity costs 60 per unit and is only paid once and used in both periods. Find the optimal (maximum) profit.

Consider the following two-period model of dynamically efficient extraction of a non-renewable natural resource. The constant social marginal cost of extraction is 40 in each period and the total stock of the resource is Q = 300 units. Moreover, the social marginal beneÖt is MB(Qt) = 200 Qt, where Qt is the quantity of resource extracted in period t, for t = 0; 1. The discount factor is 0:8. (c)  Suppose that there is a market to trade the resource. What is the equilibrium price corresponding to each period? Justify the answer.

Based on the following information: The investment cost is paid in full in quarter 0, and the cost of the factory is 100000 while the cost of the research is also 100000. The factory has a lifetime of 20 quarters (5 years) and the value of the factory at the end of quarter 20 is 0 Only green jetpacks should be produced at the factory throughout its lifetime. There is no investment in research to streamline production or material consumption. Suppose the quarterly demand in the market is constant and given at P = 338 - 0.018 * Q, where P is price and Q is the number of jetpacks in demand. Assume P is 248 USD and Q is 5000. There are 5 competitors in the market (including you), and all sell the same number of jetpacks each quarter at the price of 248 each. You produce as much as you sell. The costs associated with the quarterly production at the factory are given at K = 178 * Q + 20000, where 178 * Q is direct labor cost and materials, and 20000 is quarterly maintenance cost when Q is…

Consider the following two-period model of dynamically efficient extraction of a non-renewable natural resource. The constant social marginal cost of extraction is 40 in each period and the total stock of the resource is Q = 300 units. Moreover, the social marginal beneÖt is MB(Qt) = 200 Qt, where Qt is the quantity of resource extracted in period t, for t = 0; 1. The discount factor is 0:8.(a)  What is the efficient quantity of resources extracted in each period? Provide a graphical representation of the solution. (b)  What is the marginal user cost (or scarcity rent) of the resource in each period? (c)  Suppose that there is a market to trade the resource. What is the equilibrium price corresponding to each period? Justify the answer. (d)  Suppose that it is now expected that because of an extraction technol- ogy improvement, while the Örst period marginal cost of extraction will still remain MXC1 = 40, the second period one will now de- crease to MXC2 = 20. Answer the previous…