Assume you own a copper mine. The mine has total known reserves of 500 (million metric tons). The market demand for the copper is estimated to be: P = -1.75Q + 1000 and the marginal cost curve is estimated to be: P = 1.25Q + 100.What is the efficient quantity of copper to extract if you need only consider the current period in your decision making?Assume you need to consider allocation of the mine’s resources across two periods of time—the present and the future. Assume the “future” period is 10 years from the present and you use a discount rate 7.5%. What would be the efficient (inter-temporal) allocation of the mine’s resources in each period?What would be the price in each period if demand is constant across time?

Intertemporal choice is the choice problem in economics. It is the process by which consumers make…

Answered: Assume you own a copper mine. The mine…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume you own a copper mine. The mine has total known reserves of 500 (million metric tons). The market demand for the copper is estimated to be: P = -1.75Q + 1000 and the marginal cost curve is estimated to be: P = 1.25Q + 100.

What is the efficient quantity of copper to extract if you need only consider the current period in your decision making?
Assume you need to consider allocation of the mine’s resources across two periods of time—the present and the future. Assume the “future” period is 10 years from the present and you use a discount rate 7.5%. What would be the efficient (inter-temporal) allocation of the mine’s resources in each period?
What would be the price in each period if demand is constant across time?

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