1.Assuming there are no banks (i.e. that the interest rate is zero) How much oil would the supplier produce each period so that his combined returns for both periods is maximized? Hoe much scarcity rent does the producer make on the last barrel sold in each period? How would the producer define his user costs and total marginal costs for each period?

2.Suppose that the total marginal cost of producing a barrel of oil is $10 in the first year and increases by $1 in each following year. If the price of oil stays at $20 per barrel, for how many years will oil be produced? If the price of oil drops to $18 per barrel, what will happen to the quantity of oil produced in each period?

3.If a painter tells you that he would spent $30 on a resperator (but not $31) that protects him from paint fumes that produce a 0.01% chance of killing him? How much cash value would you say that he places on his life? How would risk aversion influence that amount?

4.Assume there is a steel plant that dumps pollutants into a stream that is used by commercial fisherman. What are the private means by which the fishermen and the steel plant owner might resolve the matter? How might these differ, depending on whether or not the steel plant has a legal right to pollute the stream?

5.What is contingent valuation and what are the sources of bias that one might encounter when using it?

6.Explain how the travel cost method might be used to determine the value visitors place on their right to visit a national park?

7.What are some opportunity costs to society of land development that accountants might ignore?

8.If an unemployed person were hired to work on a public project. An accountant would include all his wages in an estimate of the project's cost to society. An economist however would not. Why?