What are the efficiency conditions for each?
What costs reflected in the inter-temporal analysis are not captured in the static analysis?
How does the discount rate factor into each analysis?
What impact does the discount rate have on the allocation of non-renewable resources across time and long run price path of non-renewable resources?
Discuss the ethical issues associated with economists use and choice of a discount rate when analyzing natural resource and environmental problems.Dynamic and static efficiency?You're great. In fact, in the case of static, marginal cost=marginal benefit without consideration of user cost. In the case of dynamic, the maximization will depend on stock of resources at the end of the first period.That's why in the next period, both marginal cost and marginal benefit have to be discounted into present value to find the maximization point.The discounted rate will play an important part of the decision process.
No comments:
Post a Comment