Quantity of Natural Resources Assignment

EC5218 assessment item 1 online quiz
Need justification for every Answers.
Question 1
point
Contingent valuation always works True/False
1. True
2. False
Question 2
points
The total quantity of natural resources to be extracted is 100 units, the rate of return is 5%pa the price now
is $20 per unit, the price in 1 year is $30 per unit and the marginal extraction cost for both points in time is
the same $10 per unit. How many units should be extracted now?
Choose at least one correct answer
1. Answer 1
Approximately 66 units
2. Answer 2
Approximately 100 units
3. Answer 3
Approximately 0 units
4. Answer 4
Approximately 35 units
Question 3
point
To get the marginal user cost, for Question 2 above, it is simply price less the marginal extraction cost.
Question 4
point
Hotelling rule states that "the value of extracting a quantity of resources now and then earning interest on it
such that the value grows to a future point in time" is equal to "the value of extracting a quantity of re-
source at the same future point in time".
Question 5
points
For Question 2 above, if we allow extraction to occur in year 2 (as well as now and year 1 as in question 2)
then the quantity extracted now doesn't change.
1. True
2. False
1. True
2. False
1. True
2. False