Suppose the figure above represents the Marginal Net Benefits for the mineral tu

Question

Suppose the figure above represents the Marginal Net Benefits for the mineral tungston for two periods.    There are currently 20 tons available in the ground. Assume the discount rate is zero. Based on the figure, which of the following statements is TRUE?

Question 3 options:

The marginal user cost for the present period would be $1.

Users in the present period would choose to extract 9 tons if they DO NOT take future MNB into account.

The efficient allocation would lead to 10 tons being extracted in each period

The efficient allocation would lead to 9 tons being extracted in each period.

The marginal user cost for the present period would be $1.

Users in the present period would choose to extract 9 tons if they DO NOT take future MNB into account.

The efficient allocation would lead to 10 tons being extracted in each period

The efficient allocation would lead to 9 tons being extracted in each period.

Explanation / Answer

Users in the present period would choose to extract 9 tons if they DO NOT take future MNB into account

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