Problem
Assume that Congress is debating two plans to increase the profitability of wildcat oil-drilling firms. Those in Congress agree that more profits in drilling would lead to more drilling. Plan A would give a tax break on current drilling activities, so that profits on current drilling operations would rise by $10 billion-providing that much extra capital for future investment. Plan B would give tax breaks on future discoveries. The tax breaks derived from plan B would be worth $3.3 billion per year for the next three years to the same wildcat drillers. Which plan is likely to generate more oil production? (Remember the effects of marginal price changes and the discount rate.)
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.