Reference no: EM133198335
Assignment:
1. Using complete sentences and, optionally, one or more relevant economic graphs, respond to "Questions for Further Discussion" #4 from chapter 12 of the course textbook.
2. This problem analyzes management of an acre of southern pine (Pinus taeda) forest
Table: Parameter values for problem 2
a
|
b
|
c
|
d
|
e
|
F
|
-34.01
|
-20.65
|
9.51
|
0.1
|
84
|
0.03
|
The wood growth function (in board feet per acre) is given by:
??(??) = exp (??/?? 2 + ??/?? + ??)
The corresponding wood growth rate function is:
??? (??) = - (???? + 2??/??3 ) ??(??)
Assuming this forest land remains in use for timber production, the value of the land cleared of trees is the following function of the rotation length ??: ??(??) = ????(??) - ?? /?????? - 1
Parameter values for this problem are provided in the table above.
2.a. Suppose the owner approaches you and asks for your advice on how to best manage the forest land for timber production. What formula would you apply to choose the best rotation length? Using complete sentences and, optionally, one or more economic graphs, describe how you would explain the formula to the land owner.
2.b. What rotation length would you recommend for this forest land? Justify your recommendation.
Suppose that, in order to promote conservation, a harvest tax is imposed that increases the fixed costs of harvest by 20% (so now ?? =$100.8). Given this change, how would you advise the land owner to adjust the rotation length for this forest land (if at all)?
Provide supporting calculations and, optionally, relevant economic graphs to justify your response.