ECON MICRO
5th Edition
ISBN: 9781337000536
Author: William A. McEachern
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 14, Problem 1.2P
To determine
The reasons for some companies drilling for their own crude oil while the others buying for the same from the market.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
(Table: Barrels of Oil) Refer to the table. The change in profit from producing the second barrel of oil is ________, and the marginal cost from producing the seventh barrel of oil is ________.
Q34
(Table: Oil Production and Demand) Use Table: Oil Production and Demand. Assume that the oil industry is a duopoly and that the marginal cost and fixed cost of producing oil are both zero. Suppose that the two firms are maximizing industry profit and splitting the profit evenly. If both firms engage in noncooperative behaviour, the industry output will be _____ barrels, and the price of oil will be _____.
Quantity
Price (per barrel)
Total revenue
0
$160
$0
10
150
1,500
20
140
2,800
40
130
3,900
50
120
4,800
60
110
5,500
70
100
6,000
80
90
6,300
90
80
6,400
100
70
6,300
110
60
5,500
120
50
4,800
130
40
3,900
140
30
2,800
150
20
1,500
160
10
0
Knowledge Booster
Similar questions
- (Reading) Many local government officials see immigration detention as good for the local economy. Do these facilities bring economic benefits? What happens when ICE contracts end or fall through?arrow_forwardEngineering economicsarrow_forward(dollars) 10 8 6 0 MR MC Quantity 1. A monopoly and is currently charging a price of $10, what would you advise them to do? 2. A monopoly and is currently charging a price of $8, what would you advise them to do? 3. If the monopoly is currently charging a price of $6, what would you advise them to do?arrow_forward
- (Warning: Hypothetical scenario) A widely read new study suggesting that eating too much bacon can cause digestive problems and stomach cancer is likely to cause Demand for bacon to shift left. Ceteris paribus, a leftward shift in the demand curve for bacon is expected to lead to ____________ prices and ____________ units sold.arrow_forwardThe demand for skilled workers in the United States has been increasing. To increase the supply of skilled workers, many argue that immigration reform to allow more skilled labor into the United States is needed. Explain whether you agree or disagree.arrow_forward1arrow_forward
- (Figure: Profits)How much profit is the firm making at the profit-maximizing quantity? a profit of $300 The firm is not making a profit—it is making a loss of $300. a profit of $70 The firm is not making a profit—it is making a loss of $70.arrow_forward(NON-RENEWABLE RESOURCES) The demand and supply functions for oil for the current generation (in million barrels) is: Demand: Qd = 250 – 5P Supply: Qs = 5P a. Assume the current generation does not consider the future at all. Draw a supply and demand graph showing the equilibrium price (P) and quantity (Q) consumed by this generation showing clearly the numbers for P and Q. b. Calculate the marginal net benefit (MNB) of consumption on this period and draw the graph. Explain your answer. [Hint: to calculate the MNB, convert the supply and demand curves as a function of quantity, P = f(Q)] c. Assume that the next generation will have the same demand. Supply for both generations is only 250 million barrels. Interest rate (r) is 5%. Calculate the efficient allocation of resources between the two generations. Thank you Bartleby for the help! I really need it!arrow_forward(Table: Revenues and Costs for Two Industries) Suppose that the table gives payments to labor, land, and capital in the manufacturing and agriculture sectors. Now, suppose that the price of manufacturing goods increases by 10% (Pu), and wages increase by 5%. What would we expect to take place? Manufacturing Sales revenue-Pu O$100 Payments to labor-11L-570 Payments to capital Re-K 530 Agriculture Sales revenue PQ-3100 Payments to labor- La 560 Payments to land-Rr7-540 More output will be produced in the manufacturing sector. The rental rate on capital will decline More output will be produced in the agriculture sector O Labor will migrate to the agriculture sector. Attempt- 1 Hourarrow_forward
- Hi, I need help on this table.arrow_forward19. (Catalogue companies are the classic example of perfectly inflexible prices because once they print and ship out their catalogues, they are committed to selling at the prices printed in their catalogues. If a catalogue company finds its inventory of sweaters rising, what does that tell you about the demand for sweaters? If the inventories are rising for sweaters we know that demand for sweaters must be increasing, falling ). This is because prices are fixed, so this implies that people are buying less of the good due to a . increase, decrease ) in demand (see Figure 6.1b). In most circumstances, this accumulation of inventories suggests that the demand for sweaters was unexpectedly, high, unexpectedly low, as expected ) since companies try to smooth out production to minimize costs. If the company could change the price of sweaters, it would (raise the price, lower the price, keep the price the same ). Given that the company cannot change the price of sweaters, consider the number…arrow_forward(Figure: Pineapples) Refer to the figure. What is their total profit or loss? $360,000 $840,000 –$400,000 –$200,000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax