Suppose you are deciding how much oil to pump from your oil well in the next two years.Other things equal, you will be more likely to pump more oil this year than next year if you expect:

Question

Quizplus · Accepted Answer

If you expect a higher price for oil this year than next year, it's rational to pump more oil this year to take advantage of the higher price. This is because the revenue earned from selling more oil this year will be greater than the revenue earned from selling the same amount next year when the price is expected to be lower. Therefore, pumping more oil this year would be the best choice.

Suppose You Are Deciding How Much Oil to Pump from Your