Suppose we have the following data Demand in period 0: PO = 10 - Q0 Demand in period 1: PO = 10 - QI In situ stock size = 6 MC of extraction = 2 interest rate = 0 What is the optimal price in period 1 according to the dynamically efficient allocation? A. 4 B. 8 C. 7 D. 10

Suppose we have the following data Demand in period 0: PO = 10 - Q0 Demand in period 1: PO = 10 - QI In situ stock size = 6 MC of extraction = 2 interest rate = 0 What is the optimal price in period 1 according to the dynamically efficient allocation? A. 4 B. 8 C. 7 D. 10

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter23: Price-searcher Markets With Low Entry Barriers

Section: Chapter Questions

Problem 10CQ

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Please give correct typed step by step proper explanation of the each option given . Will give you thumbs up only for the correct answer. Thank you .

Suppose we have the following data

Demand in period 0: PO = 10 - Q0

Demand in period 1: PO = 10 - QI

In situ stock size = 6

MC of extraction = 2

interest rate = 0

What is the optimal price in period 1 according to the dynamically efficient allocation?

A. 4

B. 8

C. 7

D. 10

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