Reference no: EM131021390
Fracking, or hydraulic fracturing, has been used more frequently in recent years to drill for oil and natural gas that previously was too expensive to obtain. According to an article in the New York Times, "horizontal drilling has enabled engineers to inject millions of gallons of high-pressure water directly into layers of shale to create the fractures that release the gas. Chemicals added to the water dissolve minerals, kill bacteria that might plug up the well, and insert sand to prop open the fractures." Experts are divided about whether fracking results in significant pollution, but some people worry that chemicals used in fracking might lead to pollution of underground supplies of water used by households and farms.
a. First, assume that fracking causes no significant pollution. Use a demand and supply graph to show the effect of fracking on the market for natural gas.
b. Now assume that fracking does result in pollution. On your graph from part (a), show the effect of fracking. Be sure to carefully label all curves and all equilibrium points.
c. In your graph in part (b), what has happened to the efficient level of output and the efficient price in the market for natural gas compared with the situation before fracking? Can you be certain that the efficient level of output and the efficient price have risen or fallen as a result of fracking? Briefly explain. Source: Susan L. Brantley and Anna Meyendorff, "The Facts on Fracking," New York Times, March 13, 2013.
Determining the demand-supply analysis
: An industry's supply and demand curves are given by the following equations: QD = 2000 - 4P and QS = 6P
|
Find the optimal risky portfolio
: Find the optimal risky portfolio and its expected return and standard deviation - How much an investor with A = 5 will invest in the optimal risky portfolio
|
What does author mean by market failures
: Such "market failures" provide a justification for private conservation efforts and public land use planning and regulation. What does the author mean by market failures and inefficient land allocation? Explain why the author describes inefficient..
|
Two-stage sampling design
: 1 A study of academic dishonesty among college students used a two-stage sampling design.
|
What has happened to the efficient level of output
: Experts are divided about whether fracking results in significant pollution, but some people worry that chemicals used in fracking might lead to pollution of underground supplies of water used by households and farms. First, assume that fracking c..
|
Pearson product-moment correlation
: Compute the Pearson product-moment correlation coefficient to determine the strength of the correlation between these two variables. Comment on the strength and direction of the correlation.
|
What is the quantity of textbooks demanded domestically
: Given the above information what is the quantity of textbooks demanded domestically when this market opens to trade? What is the quantity of textbooks produced domestically when this market opens to trade? Given the above information will Zipia im..
|
What type of externality arises from studying
: Earning more will enable them to spend more on their future families for things such as orthodontia, nice clothes, admission to expensive colleges, and travel. Tom thinks about the potential benefits to his potential children when he decides how ..
|
Illustrate the price of gas under the new law
: Is there an equation that would illustrate the price of gas under the new law? Is there an equation that is parallel to the equation that would illustrate the price of gas under the new law?
|