Consider the crude oil market in the mid-1980s in the United States. Equilibrium price was $22.67 per barrel with 9.33 million barrels consumed on a daily basis.If the world price is lower than the equilibrium price for a domestic nation (in this case, the United States), the possibility exists for foreign countries to export a product to the domestic nation.This is the case for crude oil. In this market, assume the world price of crude oil is $16 per barrel:Which of the following combinations of quantity supplied and quantity demanded would exist in the United States if the world price of crude oil is $16 per barrel as described above.O A. A quantity demanded of 11 and a quantity supplied of 6.O B. Aquantity demanded of 11 and a quantity supplied of 11.O C. A quantity demanded of 6 and a quantity supplied of 11.O D. All of the above are possible when the world price is $16 per barrel.

It is basic concept of economics that when the quantity supplied is increased at cheaper price then…

Answered: Consider the crude oil market in the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Economics Question
If the United States is currently importing 14 million barrels per day at a world price of $4.00 per unit (the entire amount consumed), what is the effect on imports of a tax equal to $4.00 per unit? 1.) Using the line drawing tool, help determine the quantity of U.S. crude oil imports after the $4.00 per-unit tax by drawing a horizontal line at the price paid by U.S. consumers. Label this line + Tax'. 2.) Using the point drawing tool, determine quantity demanded at the price paid by U.S. consumers after the imposition of the import tax. Label this line 'Pop'. 3.) Using the point drawing tool, determine quantity supplied at the price paid by U.S. consumers after the imposition of the import tax. Label this line "Pas". Carefully follow the instructions above and only draw the required objects. The amount of imports after the $4.00 per-unit tax is million barrels per day. Before the tax, domestic producers supplied 0 barrels of crude oil. They now supply million barrels Price per barrel…

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