If the supply of a depletable resource is insufficient to cover demand in two ti

Question

If the supply of a depletable resource is insufficient to cover demand in two time periods, how will the resource be allocated efficiently? The second (future) period would always get a higher allocation. The allocation between the two periods would minimize the present value of the net cost incurred in the two time periods. The allocation between the two periods would maximize the present value of the net benefit received in the two time periods. The first (present) period would always get a higher allocation.

Explanation / Answer

The first(present) period would always get a higher allocation. This is because it is assumed that in future, other resources will be discovered or invented that makes the lives of people in future at least as comfortable as the lives of the people today.

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