Question

)Suppose that Wakanda is concerned about eciently allocating its limited

supply of Vibranium, a nonrenewable natural resource, over two time periods.

Assume that the inverse demand for Vibranium in the two periods is given

by:

MB = 350 − 2q

where q denotes the amount of Vibranium consumed. The marginal cost of

extracting Vibranium is denoted by:

MC = 50 + q

a.How much Vibranium would Wakandans wish to have in each time period,

ignoring the other time period? That is, what is the static ecient amount of

Vibranium to be consumed in each period? (4 pts)

Now, suppose that there are a total of 100 units of Vibranium available for

the two periods. Let the discount rate be r = 5%.

b.What is the magnitude of scarcity of Vibranium (in units) over the two

time periods, using the static allocations? (3 pts)

c.Now, solve for the dynamically ecient allocation of Vibranium. (4 pts)

d.Show the dynamically ecient allocation graphically. (4 pts)

e.What would be the marginal user cost ineach period? No need to

discount the second period MUC. (4 pts

I need help with a b c d e

Answer 1