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Final

Econ471_final 2012.pdf

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Department
Economics
Course
ECON 471
Professor
Ratna Shrestha
Semester
Summer

Description
2012Final Question 1 Suppose that the demand curve for a nonrenewable resources is PQt10004 Qt and MC of extraction is 40 throughout the twoperiod of extraction period 0 and 1 The total stock of resources is 200 units and market discount rate is 10 throughout the periodsa If the market for this resources is competitive what are the optimal quantities extracted and prices in each periodb If the miner is the only supplier in this industry do the results in part a changeCalculating new scarcity rent and interpret your results Use the Hotellings r directly without setting up Lagrangian c Now suppose that discount rate increase to 20 draw a diagram to show how this increase in social discount rate will affect monopoly quantities of extractiond Now suppose that the marginal extraction cost in period 1 reduces as the improvement o
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