Question
NOTE: Your Final Answer value should be rounded up to 4 decimal places. Do not put $ and comma symbol. Suppose market demand for oil
NOTE: Your Final Answer value should be rounded up to 4 decimal places. Do not put $ and comma symbol. Suppose market demand for oil is Q(P)=5-0.125P where Q is billions of barrels (BBL) or oil per year and P is price per barrel. Marginal extraction costs are $5 per barrel. There is a total of 8 BBL of oil available to use in periods 0 (current year) and 1 (next year). Assume the annual interest rate is 5 %. Use Hoteling's model and write down the final value (rounded up to 4 decimal placed for the following: Blank 1: Q1 (Quantity at time period 1) Blank 2 P1 (Price at time period 1) Blank 3: PVISW) Blank1=? blank 2=? blank 3=?
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