OPTIMAL ROTATION: Consider the following questions. a) At what age is the timber

Question

OPTIMAL ROTATION: Consider the following questions.

a) At what age is the timber volume the greatest?
b) At what age is the growth in timber volume (eg Annual Increment) the greatest?
c) At what age is the maximum MAI? Explain why this is the Biological Optimum.
d) At what age is the profit from timber harvesting the greatest given an interest rate
of 2%? Compare to (a) and (b) and discuss the intuition.
e) At what age is the profit from timber harvesting the greatest given an interest rate
of 10%? Compare to (c) and discuss the intuition.
f) Suppose the market prices rises to 20$. At what age is the profit from timber
harvesting the greatest given an interest rate of 2%? Compare to (d) and discuss
intuition.

OPTIMAL ROTATION: Consider the following questions. a) At what age is the timber volume the greatest? b) At what age is the growth in timber volume (eg Annual Increment) the greatest? c) At what age is the maximum MAI? Explain why this is the Biological Optimum. d) At what age is the profit from timber harvesting the greatest given an interest rate of 2%? Compare to (a) and (b) and discuss the intuition. e) At what age is the profit from timber harvesting the greatest given an interest rate of 10%? Compare to (c) and discuss the intuition. f) Suppose the market prices rises to 20$. At what age is the profit from timber harvesting the greatest given an interest rate of 2%? Compare to (d) and discuss intuition.

Explanation / Answer

a)

V'= 150t - t^2 =0

t = 150

at age 150 volume is greatest

b)

V" = 150- 2t =0

t = 75 years

at gae of t=75 growth is greatest

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