There exists 3000 tons of a non-renewable resource (q). Demand is given by P=800−0.25q where P is price. Marginal cost is constant and equal to 200. Assume there are two choices: either to mine the resource today (period 0) or in the next period (period 1). Assume a discount rate of 3%.For each question state: 1.How much will be mined in period 0 and 1, respectively? 2.What is the increase in price in percent between the periods?

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