1. Suppose you run a small oil well on the Western slope of Colorado. Your production is very small relative to that of the world and thus your production decisions do not impact the world price of oil. You have a stock of 1,200 barrels of crude underground which you can extract. Your annual marginal cost of extraction is equal to c*q and for each barrel produced, you can sell it for $P (which is equal in both years unless explicitly stated otherwise). You must allocate production (extraction) across two years (0,1). Assume r=0.2 for all parts. Three years of extraction (k) Now suppose you can extract for three years instead of two. If P = 100 and c= .25 for all periods, what are your optimal quantities, 90, 91, and 92? (1) Now suppose the price increases to P = 150 for all three years. What are your optimal quantities, 90, 91 and 22? 1. Suppose you run a small oil well on the Western slope of Colorado. Your production is very small relative to that of the world and thus your production decisions do not impact the world price of oil. You have a stock of 1,200 barrels of crude underground which you can extract. Your annual marginal cost of extraction is equal to c*q and for each barrel produced, you can sell it for $P (which is equal in both years unless explicitly stated otherwise). You must allocate production (extraction) across two years (0,1). Assume r=0.2 for all parts. Three years of extraction (k) Now suppose you can extract for three years instead of two. If P = 100 and c= .25 for all periods, what are your optimal quantities, 90, 91, and 92? (1) Now suppose the price increases to P = 150 for all three years. What are your optimal quantities, 90, 91 and 22