Natural Resource Economics
Natural Resource Economics ESA 460
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This 1 page Class Notes was uploaded by Westley Wintheiser on Saturday September 19, 2015. The Class Notes belongs to ESA 460 at Michigan State University taught by Richard Horan in Fall. Since its upload, it has received 48 views. For similar materials see /class/207215/esa-460-michigan-state-university in Agricultural & Resource Econ at Michigan State University.
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Date Created: 09/19/15
ESA 460 Spring 2011 Problem Set 8 Answers Consider a cod shery Suppose the growth function for cod is gS 04 S l 7 S 1000 where S is the stock of cod in the shery measured in metric tons Marginal growth of the shery is given by AgAS 041 7 S500 The price ofa unit of cod harvests is constant p 3000 Suppose the shery is a schooling shery In this case harvesting costs are independent of the stoclg so that there are no marginal cost savings arising from a larger stock Let harvest costs be given by TC 200k where h is the harvest Marginal harvesting costs are constant and equal to MC 200 The discount rate is r 01 1 Determine the marginal user cost of the resource Will this value change over time The marginal user cost MUC equals p MC 3000 200 2800 This value does not change over time 2 What is the steady state golden rule equation for this problem Explain this equation and use it to determine the steady state stock and harvest levels and the steady state level of economic net bene ts There are no marginal cost savings so the golden rule equation is r AgAS or 01 041 S500 This equation can be used to solve for 0104 1 S500 S500 1 0104 075 s 375 h gS 04 x375 1 3751000 9375 Steady state economic net benefits 3000xh 200xh 2800xh 262500