Consider the situation in which wood sells for $500 per cubic metre (net of harvesting costs), the social discount rate is 2%, bare land suitable for forestry costs $20,000 per hectare, and it costs $1000 to replant a hectare of land. Is it socially optimal to cut (or leave for another year) a one hectare stand of trees that has 600 m' of usable wood, is adding 20 m'of wood per year, and yields $400 in nonharvest benefits per year.

Consider the situation in which wood sells for $500 per cubic metre (net of harvesting costs), the social discount rate is 2%, bare land suitable for forestry costs $20,000 per hectare, and it costs $1000 to replant a hectare of land. Is it socially optimal to cut (or leave for another year) a one hectare stand of trees that has 600 m' of usable wood, is adding 20 m'of wood per year, and yields $400 in nonharvest benefits per year.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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