The long-run cost of gas is 100 the price step size is 125, Ask an Expert

Economics

The long-run cost of gas is 100. The price step size is 1.25. The initial price of gas is two steps below the long-run cost. The well produces 10 units of gas in the first period of drilling and 7 in the second period of drilling. The cost of drilling in the first period is 800 in the first period and 600 in the second period. The royalty rate will be 15%. Let the step coefficient Z=6, so that the probably of an up move is 0.5(6-S)/6.

When will the producer start production on this well? How much will the bonus payment for this well be in a competitive market?

View complete question

Business Economics, Economics

Category:- Business Economics
Reference No.:- M91855822

Have any Question?Write your Review or question?

Related Questions in Business Economics

Answer in true or false1 in the circular flow model firms

Answer in true or False : 1) In the circular flow model, firms sell the services of factors of production to households 2) If GDP included the value of leisure time, the value of US GDP would most likely increase. 3) GDP ...

Consider cy y2 2y 4 many firms have access to this

Consider: C(y) = y^2+ 2y + 4. Many firms have access to this technology, in fact so many that there is not room for all to profitably operate in the industry. The market demand for the product is given by P = 30-Y , wher ...

Question 1 the toronto blue jays raises ticket prices from

Question 1: The Toronto Blue Jays raises ticket prices from $100 to $120 per seat and experience a decline in ticket sales from 12000 to 10000 per game. i) What is the elasticity of demand for tickets? ii) Assuming the m ...

Trans-pacific partnership tppa what are the economic

Trans-Pacific Partnership (TPP) A. What are the economic implications? Provide a credible citation. B. What possible impact could this event have on global trade? Provide a credible citation. C. What is President Trump's ...

Suppose the cross-price elasticity of demand between goods

Suppose the cross-price elasticity of demand between goods X and Y is -4. How much would the price of good Y have to change in order to change the consumption of good X by 10 percent?

On average the parts from a supplier have a mean of 358

On average, the parts from a supplier have a mean of 35.8 inches and a standard deviation of 2.4 inches. Find the probability that a randomly selected part from this supplier will have a value between 31.0 and 40.6 inche ...

A highway rest area contains a vending machine that

A highway rest area contains a vending machine that dispenses cups of coffee. The amount of coffee that the machine provides when a purchase is made approximately follows a uniform distribution between 200 and 250 ml. (a ...

1 lisa and david have been married for two years they have

1. Lisa and David have been married for two years. They have just decided that summer of 2020 should be spent in Switzerland. They figured out that in order to meet the cost of the entire vacation they would only have to ...

Image manufacturing is an electronics manufacturer and

IMAGE Manufacturing is an electronics manufacturer and retailer. Its main products are Ultrabook computers, PCs and calculators. The current price of the Ultrabook is $ 600, the PC is $700 and the calculator is $30. This ...

How do changes in income affect consumption and savingwhat

How do changes in income affect consumption (and saving)? What are factors other than income that can affect consumption?

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Business Economics Expert