4.2 Supply and Demand Analysis: An Oil Import Fee
Refer to the information provided in Figure 4.4 below to answer the questions that follow. Figure 4.4
-Refer to Figure 4.4. If a $25 per barrel tax is levied on imported oil, the United States will
A) import 2 million barrels of oil per day.
B) import 6 million barrels of oil per day.
C) import 10 million barrels of oil per day.
D) export 10 million barrels of oil per day.

Question

4.2 Supply and Demand Analysis: An Oil Import Fee
Refer to the information provided in Figure 4.4 below to answer the questions that follow.  Figure 4.4
-Refer to Figure 4.4. If a $25 per barrel tax is levied on imported oil, the United States will
A) import 2 million barrels of oil per day. 
B) import 6 million barrels of oil per day. 
C) import 10 million barrels of oil per day. 
D) export 10 million barrels of oil per day.

Quizplus · Accepted Answer

The tax will increase the price of imported oil, which will reduce the quantity demanded. The new equilibrium quantity will be at the intersection of the new supply curve (S') and the demand curve (D), which is at 2 million barrels of oil per day.

42 Supply and Demand Analysis: an Oil Import Fee