Econ 374 Assignment 2 - FRE/ECON374 Land Economics Problem...

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FRE/ECON374 Land Economic s Problem Set 2 (100 Points) Due: 21 st October 2011 at 11 AM. Instructions: a) Please answer all three questions below. They carry equal weight. b) Problem sets are to be handed in at the beginning of class at 11 AM, Friday, October 21st 2011. Please do not upload your problem sets in vista. If you do, they will not be graded. c) Any problem set received after the time it is due will not be graded. d) Please label and mark all graphs clearly (if applicable). Questions: Question 1. Consider a firm drawing oil from the oil sands. It faces a flat demand curve, that is a constant world price, of 70$ a barrel. Marginal costs of extraction, also measured in dollars, of oil is given by an upward sloping marginal cost curve: MC=10+q, where q represents thousands of barrels. a. What is the profit maximizing number of barrels this firm will extract? The government imposes a new rule that requires careful storage of waste from the extraction process. The firm has to build tailings ponds to house
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This note was uploaded on 11/18/2011 for the course ECON 374 taught by Professor Sumeetgulati during the Winter '11 term at The University of British Columbia.

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Econ 374 Assignment 2 - FRE/ECON374 Land Economics Problem...

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