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# Using the 2 period model.

Using the 2 period model. If the 2 versions are the same except that the 2nd version has a lower discount rate as opposed to the first, what effct would the higher discount rate have on the allocation between the 2 periods and the magnitude of the present value of the marginal user cost. If the following equations apply :

8 - .4 q 1 - 2 - x = 0. Using a 1.10 = the discount rate.

8 - .4 q 2 - 2 - x = 0. Using a 1..05 discount rate.

q 1 + q 2 = 20.

Please show the math as I'm struggling to see this play out.