Q1. An oil company refines crude oil valued at $62/barrel and sells it to motorists at its retail outlets. The price is $2.90/U.S. gallon ($0.77/L). On a per unit basis (e.g., per gallon or per liter), by what percentage has the price increased going from crude oil before refining to final sale to the motorist? Also what happens when oil at $100/barrel and retail outlet price at $4.00/gal ($1.06/L)?
Q2. In the context of the shareholder wealth max model and the Simple model, discuss the difference between them and explain the managerial actions that can influence the firm profitability?