In recent years, the United States has experienced large increases in oil production due in large part to a new technology, hydraulic fracturing ("fracking"). Fracking involves injecting a mixture of water, sand, and chemicals into rock formations at high pressure to release oil and natural gas. An article in the Wall Street Journalindicates that economies of scale in fracking may be considerably smaller than in conventional oil drilling. If this view is correct, what would the likely consequences be for the number of firms drilling for oil in the United States?

In recent years, the United States has experienced large increases in oil production due in large part to a new technology, hydraulic fracturing ("fracking"). Fracking involves injecting a mixture of water, sand, and chemicals into rock formations at high pressure to release oil and natural gas. An article in the Wall Street Journalindicates that economies of scale in fracking may be considerably smaller than in conventional oil drilling. If this view is correct, what would the likely consequences be for the number of firms drilling for oil in the United States?

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter21: Getting Employees To Work In The Firm’s Best Interests

Section: Chapter Questions

Problem 10MC

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