1. What special difficulties do you anticipate may arise in conducting a cost benefit analysis of the possible future use of nuclear power in Australia? Explain how you would go about such an assessment in terms of the main inputs you would need to consider, the methods to be employed and the factors most likely to affect the result.

2. Briefly discuss the key market mechanisms for the wholesale electricity market in Western Australia.

3. Suggest a strategy by which an oil refinery can reduce its price risk in the crude oil spot market. In your answer, provide details as to the nature of this price risk and the function of any financial mechanisms you have identified for the purpose.

4. Using a two-period model show that, under perfectly competitive conditions and in equilibrium, the net price of a non-renewable energy resource will increase at the discount rate. Explain the incentives on small miners which may cause them to adjust their rate of extraction so as to affect this equilibrium.