Suppose that Country X is a high-cost producer of oil and Country Y is a low-cost producer of oil. The citizens of Country X use both oil produced in their own country as well as oil produced in Country Y. If the market price of oil decreases, oil production in Country X will _______, and the citizens of Country X will _________________.
A) decrease; purchase a larger fraction of their oil from Country Y
B) increase; purchase a larger fraction of their oil from Country X
C) decrease; not change their consumption mix between imported and domestic oil
D) increase; purchase a smaller fraction of their oil from Country Y
Correct Answer:
Verified
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Figure: Oil
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