QUESTION 7 Assume that the oil extraction company needs to extract Q units of oil (a depletable resource) reserve between two periods in a dynamically efficient manner. What should be a maximum amount of Q so that the entire oil reserve is extracted only during the 1st period if (a) the marginali willingness to pay for oil in each period is given by P-27-0.5g. (b) marginal cost of extraction is constant at $3 per unit, and (o) discount rate is 2%7 199

QUESTION 7 Assume that the oil extraction company needs to extract Q units of oil (a depletable resource) reserve between two periods in a dynamically efficient manner. What should be a maximum amount of Q so that the entire oil reserve is extracted only during the 1st period if (a) the marginali willingness to pay for oil in each period is given by P-27-0.5g. (b) marginal cost of extraction is constant at $3 per unit, and (o) discount rate is 2%7 199

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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