Use the information for the question(s) below.
As an oil refiner, you are able to produce $76 worth of unleaded gasoline from one barrel of Alaska North Slope (ANS) crude oil. Because of its lower sulfur content, you can produce $77 worth of unleaded gasoline from one barrel of West Texas Intermediate (WTI) crude.
-Assuming you currently have 10,000 Bbls of WTI crude,the total benefit to you if you were to sell the 10,000 Bbls of WTI crude and use the proceeds to purchase and refine ANS crude is closest to:
A) $730,600
B) $770,000
C) $771,400
D) $773,908

Question

Use the information for the question(s) below.
  As an oil refiner, you are able to produce $76 worth of unleaded gasoline from one barrel of Alaska North Slope (ANS) crude oil. Because of its lower sulfur content, you can produce $77 worth of unleaded gasoline from one barrel of West Texas Intermediate (WTI) crude.
-Assuming you currently have 10,000 Bbls of WTI crude,the total benefit to you if you were to sell the 10,000 Bbls of WTI crude and use the proceeds to purchase and refine ANS crude is closest to:
A) $730,600 
B) $770,000 
C) $771,400 
D) $773,908

Quizplus · Accepted Answer

D) Total Benefits
Sell WTI and use proceeds to buy ANS
10,000 Bbls WTI × $73.06/Bbl = $730,600
Buy ANS crude
$730,600 / $71.75/Bbl ANS = 10,182.57 or approx 10,183 Bbls ANS
10,183 Bbls × $76 of gasoline/Bbl = $773,908

Use the Information for the Question(s) Below