3. Assume that there is a resource that can be consumed in 2 periods, now and...

3. Assume that there is a resource that can be consumed in 2 periods, now and the future. In the two-period scenario, suppose the marginal benefit curve for each period is given by the equation y = 100 – 2x. (10 points)

3.a. What is the optimal consumption level in each period if the total quantity is 100? Explain.

3.b. What is the dynamically efficient allocation in each period if the total quantity is 60 and the discount rate is zero?

Expert Solution

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Rahul Sunny answered 1 year ago

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