Practice problems_Final_Sketched Solutions - EBF 200 Introduction to Energy and Environmental Economics Final Practice Problems Sketched Solutions

Practice problems_Final_Sketched Solutions - EBF 200...

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EBF 200 Introduction to Energy and Environmental Economics Final Practice Problems Sketched Solutions Multiple choice 1
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Problems 1. Suppose the world demand schedule for oil is as follows:PriceperbarrelQuantitydemanded$5040$7530$12520There are two oil producing countries, A and B. Each willproduce either 10 or 20 barrels of oil. Assume they can producethis oil at zero cost.a.There are four possible outcomes: A produces 10 or 20 and Bproduces 10 or 20. Find each country’s profit for each ofthese possibilities. 2
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b. Suppose these countries choose the quantity of oil toproduce simultaneously and without consulting with oneanother. Show that each country will produce 20 barrels ofoil and each will earn a profit of $1,000.
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