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 marginal willingness to pay for oil in each period is given by P = 34 - 0.2q, (b) marginal cost of extraction is constant at $3 per unit, and (c) discount rate is 2%?
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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 marginal willingness to pay for oil in each period is given by P = 34 - 0.2q, (b) marginal cost of extraction is constant at $3 per unit, and (c) discount rate is 2%?
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- Suppose the Marginal Benefit and Marginal Cost for crude oil at any given period is: MB = 159 - 2.1Q and MC=36 + 0.9Q Where price is measured in dollars and quantity is measured in barrels. The total oil reserve is 50 tons. What is the Optimal barrels of oil that should be extracted in the current period (suppose we don’t need to be concerned with any future periods)?Consider the following two-period model of dynamically efficient extraction of a non-renewable natural resource. The constant social marginal cost of extraction is 40 in each period and the total stock of the resource is Q = 300 units. Moreover, the social marginal beneÖt is MB(Qt) = 200 Qt, where Qt is the quantity of resource extracted in period t, for t = 0; 1. The discount factor is 0:8. (c) Suppose that there is a market to trade the resource. What is the equilibrium price corresponding to each period? Justify the answer.Your current prices are $311 in the southwestern region; $278 in the western-region and $240 in the New England region. Your marginal cost is now $212.21. Given the predicted changes in the quantity demanded by region per problem 1 and using the stay even analysis %ΔQd = %ΔP/[%ΔP + ((P-MC)/P)], can you raise the price by 7% in any of the regional markets? State you conclusion and then show all the steps supporting your conclusion. (Note you are not being asked to compute the new price.)
- Consider the following two-period model of dynamically efficient extraction of a non-renewable natural resource. The constant social marginal cost of extraction is 40 in each period and the total stock of the resource is Q = 300 units. Moreover, the social marginal beneÖt is MB(Qt) = 200 Qt, where Qt is the quantity of resource extracted in period t, for t = 0; 1. The discount factor is 0:8.(a) What is the efficient quantity of resources extracted in each period? Provide a graphical representation of the solution. (b) What is the marginal user cost (or scarcity rent) of the resource in each period?Consider the following two-period model of dynamically efficient extraction of a non-renewable natural resource. The constant social marginal cost of extraction is 40 in each period and the total stock of the resource is Q = 300 units. Moreover, the social marginal beneÖt is MB(Qt) = 200 Qt, where Qt is the quantity of resource extracted in period t, for t = 0; 1. The discount factor is 0:8.(a) What is the efficient quantity of resources extracted in each period? Provide a graphical representation of the solution. (b) What is the marginal user cost (or scarcity rent) of the resource in each period? (c) Suppose that there is a market to trade the resource. What is the equilibrium price corresponding to each period? Justify the answer. (d) Suppose that it is now expected that because of an extraction technol- ogy improvement, while the Örst period marginal cost of extraction will still remain MXC1 = 40, the second period one will now de- crease to MXC2 = 20. Answer the previous…Using a linear specification, you estimate your demand curve to equal Q=20-2P+10I, where • Q = the quantity demanded of your product • P = the price of your product • I = customer income (measured in thousands of dollars) In addition, your operations team estimates you have a constant marginal cost of $10. What quantity should you set to maximize profits assuming your average customer income equals $18000 (i.e. I=18)? a. Q=45 b. Q=50 c. Q=55 d. Q=90 e. Q=180
- Assume an electricity generator can produce electricity from two different production technologies, a dirty technology and a clean technology. The quantity of electricity produced from the dirty technology is Qd in megawatt hours (MWh) and the amount from the clean technology is Qc. The dirty technology produces carbon emissions at a constant rate of d tons per MWh of electricity generation. The clean technology produces carbon emissions at a constant rate of c tons per MWh, where Bc < Bd. The cost functions for the two generation technologies are C(Qd) and C(Qc). The market price of electricity is P. Under these assumptions, the firm’s profit function is: Profit = PQd + PQc - C(Qd) - C(Qc). 1.) Take the partial derivative of profit with respect to each output (Qd and Qc) and set each equal to zero to find the profit maximizing (“first-order”) conditions for each type of electricity. Denote marginal costs of each type of electricity as MCd and MCc. Write down and interpret…Your current prices are $311 in the Southwestern region; $278 in the western-region and $240 in the New England region. Your marginal cost is now $212.21. Given the predicted changes in quantity demanded by region per problem 1 using the stay even analysis %ΔQd = %ΔP/[%ΔP +((P-MC)/P)], can you raise prices by 7% in any of the regional markets? State your conclusion and then show the all the steps supporting your conclusion. (Note you are not being asked to compute the new price. The predicted changes in quantity demanded by region per problem 1 are: 19.32 or 19% percent change in quantity demanded for the Southwestern region Western Region is 0.245 or 24.5 or 25% NE Region is 0.4032 or 40.32 or 40% I don't understand this question and need assistance.Assume that a country is endowed with 7 units of ol reserve. There is no oll substitute available. How long the oll reserve wll last if (a) the marginal willingness to pay for oll in each perlod is given by P= 10 -0.63q. (b) the marginal cost of extraction of oll is constant at $2 per unit, and (c) discount rate is 1%7
- Your current prices are $311 in the southwestern region, $278 in the western region and $240 in the New England region. Your marginal cost is now $212.21. Given the predicted changes in the quantity demanded by region per problem 1 and using the stay even analysis %ΔQd = %ΔP/[%ΔP + ((P-MC)/P)], can you raise the price by 7% in any of the regional markets?A ship travels between ports, A and B, which is a total distance of D. The cost per-hour of operating the ship is c(v) = w +v", where w > 0 represents the hourly wages of the ship's employees, v is the ship's velocity, and n 2 2 is a parameter. The objective is to choose v so that the trip is made at minimum cost. (Hint: velocity is equal to distance divided by the time taken on the trip, or what is the same, time taken is equal to distance divided by velocity) 1. Assume that v = 2. Find the expression for the indirect cost function, and consider its first two derivatives with D and with w.C&A Fast Food has four activities in serving a customer: greet customer, take order, process order, and deliver order. Each activity is staffed by one employee (for a total of four employees). The processing time for each activity is given as follows: Greet customer Take order Process order Deliver order Activity Processing time per customer 2 seconds 30 seconds 60 seconds 5 seconds Assume demand is unlimited. If one additional employee is added to the bottleneck activity, what will be the percentage change in process capacity?