Socially efficient price in the two years

Assignment Help Macroeconomics
Reference no: EM131228989

BC's land base is 95 million hectares and forests cover 62% (55 million hectares) of the province. BC is Canada's most ecologically diverse province, with temperate rainforests, dry pine forests, alpine meadows, and more. But only 24% (22 million hectares) of these forests is available for harvesting. Of that amount, only 200,000 hectares - or less than 1% - are harvested on an annual basis.

Suppose the demand curve for raw materials from the forests is Qd = 50 - 0.5P, where Q is the units of raw materials produced from the forests and P is the price of raw materials in dollars. The marginal cost of supply is $40 (Here we ignore any externalities). Please complete questions of Part I and II.

Part I.

Now we assume that this two curves represent the marginal current benefits (MB=MCB) and the marginal current costs (MC=MCC) respectively. Also assume that the user costs equal UC=2Q (note that the user costs are positive).

(a). Calculate the socially efficient level of quantity of raw materials produced inter- temporally. Please use a graph to illustrate it.

(b). If the current quantity of output equals 25, please find the inter-temporal marginal net benefit from an increase in current output at this point.

Part II.

Now we assume another situation: if 39 units of raw materials are to be allocated between two years (Note: we still have MB=MCB and MC=MCC, but we do not know UC in this case).

(c). How much would be distributed to the first year and the second year respectively, if a dynamic efficiency is achieved? Given the interest rate is 0.10.

(d). What is the socially efficient price in the two years?

(e). What is the UC in each year?

Reference no: EM131228989

Questions Cloud

Provide reasonable accommodation for employees disability : Sidney worked for the post office as a letter carrier, but after Sidney had hip surgery, he was no longer able to do the work of a letter carrier that required extended periods of walking and lifting of moderately heavy loads. After Sidney had exhaus..
Derive an fdtd ade formulation for such a medium : Combined Drude / Lorentz medium. A large number of metals, including nickel, silver, and platinum [5], are modeled with a combined Drude / Lorentz model of the susceptibility.
Analyze the return on equity for the last two years : Contrast IASB basis for accounting and FASB/GAAP accounting. Compare three companies and their strategies for managing their working capital. Analyze the Return on Equity (ROE) for the last 2 years using the DuPont method.
Socially efficient price in the two years : What is the socially efficient price in the two years? What is the UC in each year?
Which types of facilities are the systems designed : What are the features that differ? For which types of facilities are the systems designed? Would these internet sites be helpful to an organization investigating implementing a clinical information system?
How does this affect the reflections : Modify the parameters of the polynomial grading, in particular the order m, between 3 and 4 (it need not be an integer). How does this affect the reflections? What m gives the lowest reflections?
Reconsidering its current inventory control system : Crew Soccer Shoes Company is reconsidering its current inventory control system and distribution strategy for soccer shoes. The information regarding the shoes is as follows: Annual Demand = 1000 pairs/year Lead time = 1 week Order cost = $35/order H..
Demonstrate a knowledge of theory : The report should demonstrate a knowledge of theory and an appreciation of how to apply this theory to real world problems. The report should be tightly argued with small steps of logic

Reviews

Write a Review

Macroeconomics Questions & Answers

  Inflation targeting be a good policy

Why might it be difficult for the Fed to formally adopt inflation targeting?  Would inflation targeting be a good policy for the Fed in the present economic environment

  In using the taylor rule

In using the Taylor Rule as a guideline for monetary policy, what are the pros and cons of using forecasted values of inflation and output rather than observed values of these variables?

  Describe the present economic crisis situation in europe

Describe the present economic crisis situation in Europe.  Why has it been so difficult for the Europeans to find a solution to this problem?   Comment on what implications the crisis may have for the rest of the world if Europeans are not able to ag..

  Long-term federal government budget problems

Question:. Explain why there are long-term Federal government budget problems. Explain why the base-line forecast of the CBO is misleading.

  Derive and compare demand curve

Question based on Derive and compare demand curve,  Derive Ambrose's demand function for peanuts. How does it compare with Johnny's demand curve for peanuts?

  Problem based on utility function

Problem based on  Utility Function - Problem,  Answer and explain the following using a diagram which is completely labeled.

  Laffer curve : tax rate and tax revenue

Question based on Laffer Curve : Tax Rate and Tax Revenue,  Do raising tax rates necessarily raise tax revenue? What factors affect how tax revenue changes when tax rates change?

  Problem - income elasticity of demand

Problem - Income Elasticity of Demand,  Interpret the following Income Elasticities of Demand (YED) values for the following and state if the good is normal or inferior; YED= +0.5 and YED= -2.5

  Positive balance of payment

Question Positive Balance of Payment: "Things will look good for the US if we could just get to where we are consistently running a positive Balance of Payments."

  Effect of recession on the investment curve

Comment on the effect of a recession on the investment curve (only) and on the level of savings, investment, and the equilibrium real interest rate in the financial crisis that hits United States first starting in fall 2007.

  Affect of falling domestic investment on trade surplus and

How will a fall in domestic investment affect the trade surplus and net capital outflows in the domestic economy, the trade deficit and capital inflows in the rest of the world.

  Crises in the banking sector and bank run

Banking crises crisis decreases depositors' confidence in the banking system. What would be the effect of a rumor about a banking crisis on checkable deposits in such a country?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd