42 Supply and Demand Analysis: an Oil Import Fee

Multiple Choice

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. Assume that initially there is free trade. If the United States then imposes a $25 tax per barrel of imported oil,

A) the quantity of oil demanded will be reduced by 4 million barrels per day.
B) the quantity of oil supplied by U.S. firms will increase by 8 million barrels per day.
C) U.S. imports of oil will increase by 4 million barrels per day.
D) the price of oil in the U.S. will increase to $150 per barrel.