3. Suppose that Sea Shell Oil Company (SS) is pumping oil at a field off the coast...
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3. Suppose that Sea Shell Oil Company (SS) is pumping oil at a field off the coast of Nigeria. At this site, it has an extraction cost of $30 per barrel for the first 10 million barrels it pumps each year and then $60 per barrel for all subsequent barrels that it pumps each year, up to the site’s maximum capacity of 90 million barrels per year. [LO19B.4]
a. Suppose the user cost is $50 per barrel for all barrels and that the current market price for oil is $90 per barrel. How many barrels will SS pump this year? What is the total accounting profit on the total amount of oil it pumps? What is the total economic profit on those barrels of oil?
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Related Book For 
Microeconomics
ISBN: 9781108420969
15th Canadian Edition
Authors: Campbell R. Mcconnell, Stanley L. Brue, Sean M. Flynn, Thomas P. Barbiero
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