Production of Traditional Fuels

[Royal Dutch Shell] plans to cut its production of traditional fuels such as diesel and gasoline by 55% in the next decade… the company said it would double the amount of electricity it sells and roll out thousands of new electric-vehicle charging points.” Would Royal Dutch Shell’s decision to decrease production of fuels and increases its production of electricity be a long-run production decision because it will have occurred over “the next decade”? Briefly explain your answer.Question 3. From the article: “Renewables projects typically generate returns of around 10%, compared with the traditional 15% targeted on oil-and-gas projects.” Assume that a firm chooses to invest in a renewable project that earns a 10 percent rate of return rather than an oil-and-gas project that would have earned a 15 percent rate of return.E251-29732, Graded Application Problem Set OnePage 2 of 2Would the firm earn an economic profit on the renewable project? Define economic profit and describe the difference between that and accounting profits as discussed in class. Briefly explain your answer.For more information on Production of Traditional Fuels check on:https://en.wikipedia.org/wiki/Fossil_fuel

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