Ecn 125 Energy Markets Winter Quarter 2017 Problem Set 1 Due Thursday January 26

please help me. The file is attached.

Problem 1You own a small pipeline that transports crude oil from Canada to the US. Yours is one of many such pipelines (which we’ll label “S”, for small) operating in this competitive market, each of whose cost is $3/bbl (barrel). There are two other ways to export crude oil from Canada’s tar sands as well. The cheapest way is via a large pipeline (“XL”), whose cost is $1/barrel, and the most expensive way is by rail (“R”), with a cost of $4/barrel. Total capacity of XL, S, and R are 10, 40, and 30 MMbbl/day (millions of barrels per day), respectively. Assume that the market is perfectly competitive, and that there is no entry or exit.US demand for Canadian oil is perfectly inelastic at 35 MMbbl/day in the winter, an