Assume that a country is endowed with 33 units of oil reserve. (a) the marginal willingness to pay for oil in each period is given by P = 11 – 0.59q (b) the marginal cost of extraction of oil is constant at $3 per unit (c) the discount rate is 2% (d) the marginal cost of renewable energy is $9, where c

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter8: Cost Analysis
Section: Chapter Questions
Problem 2.2CE
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Assume that a country is endowed with 33
units of oil reserve.
(a) the marginal willingness to pay for oil in
each period is given by P = 11 – 0.59q
(b) the marginal cost of extraction of oil is
constant at $3 per unit
(c) the discount rate is 2%
(d) the marginal cost of renewable energy is
$9, where c<d<a.
How long will it take, for a country to
transition to a renewable energy source?
Transcribed Image Text:Assume that a country is endowed with 33 units of oil reserve. (a) the marginal willingness to pay for oil in each period is given by P = 11 – 0.59q (b) the marginal cost of extraction of oil is constant at $3 per unit (c) the discount rate is 2% (d) the marginal cost of renewable energy is $9, where c<d<a. How long will it take, for a country to transition to a renewable energy source?
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