Asked by Darrious Gaines on Jun 01, 2024
Verified
Refer to Figure 20.5. The domestic price of oil is $130 per barrel. If the world price of oil is $135 per barrel, this country will
A) import 23 million barrels.
B) import 9 million barrels.
C) export 5 million barrels.
D) export 14 million barrels.
Domestic Price
The price of goods or services within a country’s borders, influenced by local demand, supply, taxes, and other factors.
Oil Barrels
A standard unit of measure for crude oil and petroleum products, equivalent to 42 US gallons.
- Understand the connection between global prices and national consumption or export levels.
Verified Answer
ZK
Zybrea KnightJun 08, 2024
Final Answer :
C
Explanation :
At a domestic price of $130 per barrel, if the world price is higher at $135, the country will export oil. The difference between the domestic quantity demanded (20 million barrels) and the domestic quantity supplied (25 million barrels) at this price is 5 million barrels, indicating the country will export 5 million barrels to the world market.
Learning Objectives
- Understand the connection between global prices and national consumption or export levels.
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