Home / Questions / Suppose that the oil industry in Utopia is perfectly competitive and that all firms draw o...
Suppose that the oil industry in Utopia is perfectly competitive and that all firms draw oil from a single (and practically inexhaustible) pool. Each competitor believes that he or she can sell all the oil he or she can produce at a stable world price of $10 per barrel and that the cost of operating a well for one year is $1,000. Total output per year (Q) of the oil field is a function of the number of wells (N) operating in the field. In particular, Q = 500N – N2 and the amount of oil produced by each well (q) is given by q = Q /N = 500 – N The output from the Nth well is given by MPN = 500 – 2N a. Describe the equilibrium output and the equilibrium number of wells in this perfectly competitive case. Is there a divergence between private and social marginal cost in the industry? b. Suppose that the government nationalizes the oil field. How many oil wells should it operate? What will total output be? What will the output per well be? c. As an alternative to nationalization, the Utopian government is considering an annual license fee per well to discourage over drilling. How large should this license fee be to prompt the industry to drill the optimal number of wells?
Apr 02 2020 View more View Less
can you please help me get a solution on the case internet field trip
May 28 2018Sir Corporation is a 90 percent-owned subsidiary of Pit Corporation, acquired several years ago at book value equal to fair value. For 2011 and 2012, Pit and Sir report t...
Apr 14 2020Why did ACS contend that Johnson was not its employee? Discuss.
Jul 07 2021Generally, when advertising to consumers, the objective of an advertising campaign isa) a push strategy- to increase demand by focusing on wholesalers, retailers or sales...
May 10 2021Stores had a Quarter 2 beginning cash balance of $430. Sales for Quarters 1 through 3 are estimated at $600, $800, and $900, respectively. The cost of goods sold is equal...
Jul 12 2021what is the future value of $1,000, placing in a saving account for four years if the account pays 7.00%, compounded annually? answer should be correct to two decimal places
Jun 20 2021Make or Buy Eggers Company needs 22,000 units of a part to use in producing one of its products. If Eggers buys the part from McMillan Company for $100 instead of making ...
Jul 22 2021Find the Inverse Laplace Transform of: F(s) 5 s2 - 15s - 11 $3 (s2 + 1)
Apr 20 2021calculate standarad free energy change at 25 degree cecious using standarad reduction electrode potentials for the folling reaction 3CU+2NO3+8H TO produce 3CU 2+ +2NO+4H2O
May 13 2021Predict which substance in each of the following pairs would have greater intermolecular forces. CO2 or OCS SeO2 or SO2CH3CH2CH2NH2 or H2NCH2CH2NH 2CH3CH3 or H2COCH3OH or H2CO
Jun 12 2021