Consider a competitive oil market where a producer faces costs to get the oil out of the ground. Suppose that it costs $10 dollars per barrel to extract oil from the ground. Let denote the price of oil in period and let r be the interest rate. a. If a firm extracts a barrel of oil in period , how much profit does it earn that period? b. If a firm extracts a barrel of oil in period + 1, how much profit does it earn in period + 1? c. What is the present value of the profits from extracting a barrel of oil in period + 1? What about period ? d. If the firm is willing to supply oil in each of the two periods, what must be true about the relation between the present value of profits from sale of a barrel of oil in the two periods? Express this in an equation. Explain how this relates to the no-arbitrage condition.