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(econ) Currently the price of a nonrenewable natural resource is $50 per unit while the MEC is $20 per unit.?
2 Answers
a) What is the MUC today?
b) If the interest rate is 10%, what will be the MUC each year over the next 5 years?
c) Using your answer to part b and assuming that the MEC will be constant, find the dynamically efficient price each year for the next 5 years.
d) Suppose there is an alternative technology that costs $65 per unit. What will be the dynamically efficient price of this non-resource in each of those five years?
e) Now assume the MEC increases by $3 per unit each year. Repeat part d and find the dynamically efficient price over the next five years.
b) If the interest rate is 10%, what will be the MUC each year over the next 5 years?
c) Using your answer to part b and assuming that the MEC will be constant, find the dynamically efficient price each year for the next 5 years.
d) Suppose there is an alternative technology that costs $65 per unit. What will be the dynamically efficient price of this non-resource in each of those five years?
e) Now assume the MEC increases by $3 per unit each year. Repeat part d and find the dynamically efficient price over the next five years.
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a)Tell me in 20 words or less what course you are doing
b) Have you covered this topic in lectures and read the course books?
c) Can you suggest an answer? Have a stab at it, give your suggested answers, and then I'll comment.
I think you'll learn more by investigating and having a go yourself rather than just cribbing the answer.
b) Have you covered this topic in lectures and read the course books?
c) Can you suggest an answer? Have a stab at it, give your suggested answers, and then I'll comment.
I think you'll learn more by investigating and having a go yourself rather than just cribbing the answer.
a) Environemntal and Natural Resource Economics
b) I have read the suggested chapter and attended every lecture with notes recorded.
c) For part a) I came up with P=MEC+MUC, so 50 = 20 + MUC >>> MUC = 30.
For part b) I got Year1 30/(1.10^1)=27.27, Y2 30/(1.10^2)=24.79, Y3 30/(1.10^3)=22.54, Y4 30/(1.10^4)=20.49, Y5 30/(1.10^5)=18.63. But, he said it was wrong and to follow Hotellings Rule. He said the MUC for part b should increase and not decrease.
I have tried the question. Thats why i'm on here. I'm confused.
b) I have read the suggested chapter and attended every lecture with notes recorded.
c) For part a) I came up with P=MEC+MUC, so 50 = 20 + MUC >>> MUC = 30.
For part b) I got Year1 30/(1.10^1)=27.27, Y2 30/(1.10^2)=24.79, Y3 30/(1.10^3)=22.54, Y4 30/(1.10^4)=20.49, Y5 30/(1.10^5)=18.63. But, he said it was wrong and to follow Hotellings Rule. He said the MUC for part b should increase and not decrease.
I have tried the question. Thats why i'm on here. I'm confused.
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