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Environmental Economics: 40:329 Assignment 4 Last Name: First Name: Student ID: 1. (40%) Suppose that in a two-period mo
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- Environmental Economics 40 329 Assignment 4 Last Name First Name Student Id 1 40 Suppose That In A Two Period Mo 1 (133.11 KiB) Viewed 33 times
Environmental Economics: 40:329 Assignment 4 Last Name: First Name: Student ID: 1. (40%) Suppose that in a two-period model of a competitive mining industry, the fixed stock of ore is 1500 tonnes. Assume that the price is $515 per tonne and the cost of extraction is given by: C(qı)=0.1962 + +109+100 Also assume that the rate of interest at which rents are discounted is 5 percent. Find the optimal extraction path. Show your answer on a well labeled graph. 2. (30%) How does your answer to the first question change if the inverse demand function is given as: Pt = 700 – 0.2591 Find the optimal extraction path, the nominal market price in each period. Show your work on two well labeled graphs. 3. (30%) How does your answer to the second question change if a monopolist is in charge of the mining industry?