i need corrections made on the assignment. i will attach the assignment i did, teacher recommendations for passing, and the assignment requirements.

Competencies

• Understand economic terminology and economic definitions pertaining to decisions made by managers.
• Explain and demonstrate knowledge of concepts including thesupply/demand relationship, price ceilings and floors, and marketsurpluses and shortages.
• Elasticity, consumer choice, utility, productivity, and nature of costs.
• Demonstrate how economic theory contributes to strategic managerial decision-making.
• Understand various market structures and impacts upon firms, consumers, and government policies.
• Calculate profits and profit maximization in order to determine the optimal price and output at which firms should produce.

Course Scenario

Oil Company X is a large oil refinery which has been expanding andtaking on new investment projects. Recently, they have consideredbuilding a pipeline that stretches across the United States, from Canadato New Orleans.

As a cost analyst at Oil Company X, submit a proposal to the boardof the company critiquing the costs and benefits of building a new oilpipeline that stands to generate copious amounts of revenue. Include inyour report the following: expected changes to supply and demand, a costanalysis of the project, the cross-price elasticity of an alternativeenergy source, cost curves, the new expected profit-maximizing quantityand price of oil after completion, a risk assessment evaluatingliabilities from potential environmental damage, and a finalrecommendation.

Instructions

Use the Excel document below to complete the assignment, and submit it to the Drop Box when finished. Student Excel Spreadsheet

As an economic analyst at your firm, you are being asked toevaluate this investment opportunity and submit a 5-page proposal as aWord document.

You must include an explanation of expected changes to supplyand/or demand from economic shocks such as natural disasters andrecessions, as well as the anticipated effect of substitute goods(alternative energy sources) flooding the oil market. Be sure to includethe expected impact on equilibrium quantity and price in your regionalmarket from these potential changes.

Another team member in the Cost Analysis Department has compiledthe necessary data in the attached spreadsheet below. The total upfront cost of this project is $10 million, with $1.72 million in fixed costs.Be sure to include in your proposal any relevant curves graphed from thedata in the spreadsheet. Your Excel spreadsheet needs to include thefollowing columns in addition to what has been given to you:

1. TFC
2. TVC
3. ATC
4. AVC
5. MC

Assume that your firm will hold market power as a supplier of oilin your region, due to extensive trade restrictions the government hasagreed to put in place after completion of the pipeline. Define the newmarket structure, and give new pricing strategies the firm can use tomaximize profits for this particular market structure.

You will also include graphs to show new expectedprofit-maximizing quantity and price of oil after completion. Afterdetermining the profit-maximizing price and quantity, as well as thecorresponding average variable cost, determine the expected total profitfor the 15-year duration the pipeline will be in operation.

Be sure to also include a calculation of the cross-priceelasticity of the alternative energy source and oil. Assume the currentprice of oil is $50/gallon of crude oil. If the price increases to theprofit-maximizing price, the quantity demanded of the alternative energysource increases by 20%. Explain if these goods are complementarygoods, substitute goods, or non-related goods. If there is arelationship, indicate whether the relationship is weak or strong.Justify your answer with an explanation based on the elasticity figure.

Assume there is a 10% probability of the pipeline leaking, with anexpected liability of $3.2 billion which will be deducted from totalprofit. There is a 90% probability the pipeline will not leak. Determinethe expected return on this investment, as well as the variance.

The firm also has an alternative investment which will yield $1.6billion over the course of the same 15-year period, with a probabilityof 80%, or $1.15 billion with a probability of 20%. Calculate theexpected return, as well as the variance. The risk should be expressedas the standard deviation.

Perform a marginal analysis to determine if the firm should buildthe pipeline, considering currently available investments andopportunity costs.

Format your proposal to include a title page, introduction,conclusion, and references. Include all relevant graphs, equations, andcalculations. Show your work on calculations to ensure you receivepartial credit for incorrect answers. No credit will be given if yourwork is not shown. Remember to cite your sources using correct APAformat, and also use correct grammar, spelling, and formatting.

teacher response:

I was reviewing your Deliverable 7 submission and noticed that youdid not include any calculations in your work. You were given data toinput in an Excel file that included the following columns in additionto what has been given to you:

1. TFC

2. TVC

3. ATC

4. AVC

5. MC