Answer Happy

Duke Energy operates several nuclear plants in the Carolinas. Suppose it decides to own uranium mines, a competitive industry, and faces demand P = 300 - 10 Q, where Q is tons of uranium and P is $/ton. Marginal extraction cost is $30. The discount rate is 20%. Assuming there are only 40 tons of uranium remaining in the mine, how much should Duke extract today, and how much two years from now? What will be the price of uranium today and two years from now? [Hint: Use the equimarginal rule. Assume that Duke Energy does not extract in the first year. Only extract today and two years from now on] Referring to question 7, Duke Energy is a monopoly. Given the information in question 7, how much will Duke Energy produce in each period, and what price will they charge? [The period is today and two years from now on.]