Assume now that we know that there is only200 barrels of oil in the ground which must last society for two years.The extraction cost is $10 per barrel.In each year, the demand for oil begins at $25, and declines linearly (constantly) by $1 for each 5 barrels sold, i.e.

PriceQty Demanded

$250

$245

$2310

$2215etc.

How many barrels will be extracted in the first year?in the second year?

What will be the total marginal cost cost in the first year?In the second year?

What will be the user cost in the first year?In the second year?