[Solved] Suppose That the Current Price of Oil Is $60 a Barrel

Question 66
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Suppose that the current price of oil is $60 a barrel and the interest rate is 3%.Further,suppose that the interest rate remains unchanged and no new discoveries of oil are made.If two years from now the economist for the National Petroleum company believes that the rate of oil extraction is exactly right,believes that the rate of oil extraction has been too rapid,what would be the likely price for a barrel of oil at that time?

A)Above $63.60 a barrel
B)$63.60 a barrel
C)Below $63.60 a barrel
D)Above $65 a barrel


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