How much oil will Wyoff choose to abandon after the imposition of the tax?

The government of NWT will face an election no later than the end of 2016. The opposition party w Show more The government of NWT will face an election no later than the end of 2016. The opposition party which is gaining support has promised to impose a tax on Wyoffs oil revenues. Consider a radically different set of beliefs acted upon by Wyoffs managers. In this case the executives have reason to believe that the opposition party WILL be elected and that it WILL implement a tax on Wyoffs revenue of 0.25 per unit of oil extracted and sold. The tax is to be imposed as of January 2017. This change in tax is perfectly foreseen by Wyoffs managers as of January 2014. The entire five-year extraction program (years 2014 2015 2016 2017 and 2018) is planned on the assumption that the net-of-severance-tax price will be $1 in each of 2014 2015 and 2016 (no tax imposed) and the net price received by Wyoff will be $0.75 in each of 2017 and 2018. How much oil will Wyoff choose to abandon after the imposition of the tax? (How much oil will be abandoned in this world of a perfectly-foreseen price decrease for years 2017 and 2018?) Show less