You learn that new regulations are about to be imposed on your well to reduce the vile odors that come from it. These regulations will make extraction costly (i.e., there will be positive costs).
(a) Compared to a case where the regulations did not exist, do you expect to extract your oil more quickly or more slowly? Why?
(b) Compared to a case where the regulations did not exist, do you expect the value of your oil well to be higher or lower? Why?