This is a model that has been used to determine current crude oil prices, as discussed in the Hamilton article that goes over the different models of crude oil price determination. So it should tell us what determined the current price of crude oil. Solve for p1 as a function of the other variables. What does the current price, p1 depend on, and how? That is, for example, if s, storage costs, influence the current price, p1, do higher storage costs cause p1 to increase or decrease? That is, is there a positive or negative correlation?

Wo firms, a and b, each currently dump 50 tons of chemicals into the local river. the government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution dumped into the river. it costs firm a $100 for each ton of pollution that it eliminates before it reaches the river, and it costs firm b $50 for each ton of pollution that it eliminates before it reaches the river. the government gives each firm 20 pollution permits. government officials are not sure whether to allow the firms to buy or sell the pollution permits to each other. what is the total cost of reducing pollution if firms are not allowed to buy and sell pollution permits from each other? what is the total cost of reducing pollution if the firms are allowed to buy and sell permits from each other? a. $3,000; $1,500 b. $4,500; $3,500 c. $4,500; $4,000 d. $4,500; $2,500