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A P Ra/b a - bR 0 RtRt Figure 15.1 The non-renewable resource demand function for the two-period model.

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Presentation on theme: "A P Ra/b a - bR 0 RtRt Figure 15.1 The non-renewable resource demand function for the two-period model."— Presentation transcript:

1 a P Ra/b a - bR 0 RtRt Figure 15.1 The non-renewable resource demand function for the two-period model.

2 K P Quantity of resource extracted, R Ke -aR 0 R Figure 15.2 A resource demand curve, and the total utility from consuming a particular quantity of the resource. U(R) = shaded area

3 Net price P t Time t P0P0 PtPt T T R R0R0 Area = = total resource stock RtRt Demand P T =K 45° Figure 15.3

4 Net price P t Time t P0MP0M Perfect competition TMTM TMTM R R 0M Area = R0R0 T Monopoly P0P0 P T = P T M = K T Demand Figure °

5 K P Time T CAB P0P0 Figure 15.5 The effect of an increase in the interest rate on the optimal price of the non-renewable resource.

6 Net price P t Time t P0P0 T T R R0R0 R0/R0/ T/T/ P0/P0/ K T/T/ Demand Figure °

7 Net price P t Time t P0P0 T T R R0R0 R0/R0/ T/T/ P0/P0/ K T/T/ Demand Figure °

8 PtPt Net price path with no change in stocks Net price path with frequent new discoveries t Figure 15.8

9 Net price P t Time t P0P0 T T R R0R0 R0/R0/ T/T/ P0/P0/ K T/T/ D Figure ° D/D/

10 Net price P t Time t P0P0 T T R R0R0 R0/R0/ T/T/ P0/P0/ K T/T/ D Figure (a) 45° Backstop price fall PBPB R*R*

11 Net price P t Time t P0P0 T T R R0R0 R0/R0/ T/T/ P0/P0/ K T/T/ D Figure (b) 45° Backstop price fall PBPB R*R* 

12 Resource price Time T New gross price New net price Original net price Original gross price K cLcL cHcH Figure 15.11(a)

13 Resource price Time T T/T/ New gross price New net price Original net price Original gross price K Figure 15.11(b)

14 Net price P t Time t P0P0 T T R R0R0 R0/R0/ T/T/ P0/P0/ K T/T/ Original gross price path Figure ° New gross price path


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