Refer to the information provided in Figure 4.4 below to answer the question(s) that follow. Figure 4.4
-Refer to Figure 4.4. Assume that initially there is free trade. If the United States allowed drilling for more oil in the Gulf of Mexico, it could
A) reduce U.S. oil imports without a tariff.
B) decrease the demand for domestic oil.
C) reduce the supply of domestic oil.
D) increase the domestic price of oil.

Question

Refer to the information provided in Figure 4.4 below to answer the question(s) that follow.  Figure 4.4
-Refer to Figure 4.4. Assume that initially there is free trade. If the United States allowed drilling for more oil in the Gulf of Mexico, it could
A) reduce U.S. oil imports without a tariff. 
B) decrease the demand for domestic oil. 
C) reduce the supply of domestic oil. 
D) increase the domestic price of oil.

Quizplus · Accepted Answer

Allowing more drilling for oil in the Gulf of Mexico would increase the domestic supply of oil, which could reduce the need for imports without the need for a tariff. It wouldn't decrease the demand for domestic oil, reduce the supply, or increase the domestic price of oil; instead, it could potentially lower it by increasing supply.

Refer to the Information Provided in Figure 4