2. How could the principle ofenvironmental resources such as the atmosphere andof conchisions about optimal depletion apply or not?resources?KineExercises 5bintergenerational allocation of resources. Suppose a generation is thirty-five vee ofwe are concerned with only two generations.Demand and supply functions for oil in the present generation are given by:Demand: Qd = 200– 5P or P = 40– 0.2Qd%3DSupply: Qs = 5P or P = 0.20s%3D(a) Draw a demand and supply graph showing the equilibrium price and quantityconsumed in this generation in the absence of any consideration of the future. Nowdraw a graph showing the marginal net benefits from consumption in this period at alllevels of consumption up to the equilibrium level. Express the net benefit (benefit minuscost) algebraically.(b) Suppose that the net benefit function is expected to be the same for the nextgeneration. But there is a discount rate (interest rate) of 4 percent per annum, which forthirty-five years works out to (1.04)35, which is approximately equal to 4. Total oilsupply for both generations is limited to 100 units. Calculate the efficiant resources between the two generations and show this graphically. (Set marginal benefitsequal for the two periods, remembering to include the discount rate.)ger ores areporal allocation ohey anticipaekely to realizes will probably risecording to this(c) What is marginal user cost for this efficient allocation? If you include this user costin your original supply and demand graph, what is the new equilibrium? What is thescarcity rent? If the demand curve is the same in the second generation, what will theprice and quantity consumed in that period be?ores are usedEnvironmenntal and Natural Resource Economics: The Basicsperupwill probablyriseallocation(d) How would the answers differ if we used a zero discount rate? What can youconclude from this example about the general problem of allocation of resources overlong periods?aporal5. providinga newwable resoureits price andbe less wellent. Do yourve specifi

Answered: Image /qna-images/answer/c02cb712-0f8d-4b1e-b40d-5dd8dc516c26.jpg

of conclusio Exercises Sb intergenerational allocation of resources. Suppose a generation is thirty-five years, and We can modify the inter-period allocation model to deal with the issue we are concerned with only two generations. Demand and supply functions for oil in the present generation are given by: Demand: Od-200-SP or P = 40-0.2Qd Supply: Qs =5P or P=0.20s (a) Draw a demand and supply graph showing the equilibrium price and quantity consumed in this generation in the absence of any consideration of the future. Now .L.

of conclusio Exercises Sb intergenerational allocation of resources. Suppose a generation is thirty-five years, and We can modify the inter-period allocation model to deal with the issue we are concerned with only two generations. Demand and supply functions for oil in the present generation are given by: Demand: Od-200-SP or P = 40-0.2Qd Supply: Qs =5P or P=0.20s (a) Draw a demand and supply graph showing the equilibrium price and quantity consumed in this generation in the absence of any consideration of the future. Now .L.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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