Suppose that there is a nonrenewable resource that can be consumed today (period 1) or tomorrow (period 2) and that it has a fixed supply of 5 units. Assume that the inverse demand for the resource in each period is given by: P, = 25-50, P2 = 25-502 Moreover, assume that the resource's marginal extraction cost (MEC) is constant in both periods at $5 and that the social discount rate is 25% (i.e., r=0.25). Assuming that the resource is efficiently allocated, what is the consumer surplus in period 1? When calculating intermediate values (i.e., things like prices and quantities that are not your final answer, which is consumer surplus in this problem), please round them to two decimal places. And as always, please round your final answer to two decimal places as well. That is, you may round values besides your final answer in this problem while working towards finding your final answer.

Suppose that there is a nonrenewable resource that can be consumed today (period 1) or tomorrow (period 2) and that it has a fixed supply of 5 units. Assume that the inverse demand for the resource in each period is given by: P, = 25-50, P2 = 25-502 Moreover, assume that the resource's marginal extraction cost (MEC) is constant in both periods at $5 and that the social discount rate is 25% (i.e., r=0.25). Assuming that the resource is efficiently allocated, what is the consumer surplus in period 1? When calculating intermediate values (i.e., things like prices and quantities that are not your final answer, which is consumer surplus in this problem), please round them to two decimal places. And as always, please round your final answer to two decimal places as well. That is, you may round values besides your final answer in this problem while working towards finding your final answer.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter10: Cost Functions

Section: Chapter Questions

Problem 10.11P

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Green et al. (2005) estmate the supply and demand curves for Californa processod tomatoes. The supply function is: \[ \ln \left(Q_{s}\right)=0.200+0.550 \ln (p) \] whereQis the quantify of processing tomatoes in milions of tons per year andpis the price in dollars per ton. The demand function is: \[ \ln \left(Q_{d}\right)=2600-0.200 \ln (p)+0.150 \ln \left(p_{1}\right) . \] wherep1is the price of tornato paste (which is what processing tomatoes are used to produce) in dollars per ton. Supposept=$119Determine how the equilerium price and quantity of processing tomatees change if the price of tomato pasise tails by16%. If the price of tomato paste fals by18%, then the equaborium price will by 5 (Enter a numene response using a real number rounded to two decimal places)
PB PA The demand equations for related products A and B are given by QA = 10 and 96 PB quantities of A and B demanded, and PA and pe are the corresponding prices (in dollars) per unit. (a) Find the values of the two marginal demands for product A when PA = 16 and p = 9. (b) If pg is reduced to 7 from 9, with PA fixed at 16, use part (a) to estimate the corresponding change in demand for product A (a) Find the marginal demand for A with respect to PA. Select the correct choice below, and fill in the answer box to complete your choice. (Simplify your answer.) A. B. ap A A JªA ap A where 9A and q are the =
Suppose that there is a nonrenewable resource that can be consumed today (period 1) or tomorrow (period 2) and that it has a fixed supply of 2 units. Assume that the inverse demand for the resource in each period is given by: P1 = 25 - 5Q1 P2 = 25 - 5Q2 Moreover, assume that the resource's marginal extraction cost (MEC) is constant in both periods at $5 and that the social discount rate is 10% (i.e., r=0.10). Assuming that the resource is efficiently allocated, what is the consumer surplus in period 1?
The demand for a as a function of their price (p) is given p-Bp? Вр-1 by: QD = C+ A· where A=1, B=7 and C=40 Mp²-p² Мр-1 E where M=-11 and E=4. and the supply is given by: Qs Compute the market equilibrium price for this product. Solve the problem by first formulating an equation(s).
Suppose we alocate a foxed supply of a depletable resource between two periods in a dynamically efficient way. Assume further that the demand function is constant in the two periods and the marginal willingness to pay is given by the formula P= 7-0.46q while the marginal cost is constant at $1 per unit. The total supply ls 18 units and the discount rate is 2%. What is the marginal user cost during the first period?
In the answer below to my question which is also attached, how is the equation solved? r is given but i don't see how you can solve for q1 and q2 with the equation (25-0.4q1-5)(1+r) = 25-0.4q2 -5 = λ
Suppose the inverse demand function for a depletable resource is linear, P = 25 – 0.4q, and the marginal supply cost is constant at £5.i. If 40 units are to be allocated between two periods in a dynamic efficient allocation, how much would be allocated to period 1 and how much to period 2 when the discount rate is r = 0.15? Show your working ii. What is the marginal user cost in each period? Provide a one-sentence economic interpretation iii. Show in a diagram how the marginal user cost would change if an energy price shock were to raise the marginal cost in period 2 to £10
70 – p and the marginal cost of retail water is 2. Suppose retail water demand is given by wa mc = 0.00125w?. Currently the supplier cannot fulfill the quantity demanded under marginal-cost pricing, because natural water is in short supply. Suppose that only 32 units of natural water are available. Due to system leakage and evaporation, the relationship between natural water pumped and retail water received is Wntri – 10 Wrtl 1.1 What is the value of an action to increase natural water availability to 43 units?
- Suppose that we need to develop a model to help us to allocate a resource between two time periods: Period 1 and Period 2. Demand can be characterized in both periods as: P = 20-2Q. In both periods the marginal cost of extracting the resource is constant at $4 per unit. The total quantity of the resource that is available to allocate between the two periods is 18 units (in other words, Q1 + Q2 <= 18). Assume that the discount rate is 5%. What is the marginal user cost? a) 0; b) 0.76; c) -2; d) 1.9 Shark