Problem
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 $2.
(a) If 20 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 period when the discount rate is zero?
(b) Given this discount rate what would be the efficient price in the two periods?
(c) What would be the marginal user cost in each period?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.