Efficient Allocation
Week 2 Assignment - Efficient Allocation
Please place a bid only if you can solve this equation and show your work.
In the numerical example given in the text, the inverse demand function for the depletable resource is P = 8 - 0.4q and the marginal cost of supplying it is $4.
· If 40 units are to be allocated between two periods, in a dynamic efficient allocation how much would be allocated to the first period and how much to the second when the discount rate is zero?
· What would be the efficient price in the two periods?
· What would be the marginal user cost in each period?