Use the Information for the Question(s) Below

question 96

Multiple Choice

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.
Another oil refiner is offering to trade you of Alaska North Slope (ANS) crude oil for of West Texas Intermediate (WTI) crude oil. Assuming you just purchased of WTI crude at the current market price, the total revenue (cost) to you if you take the trade is closest to ________.

• A) $755,650
• B) $766,150
• C) $767,600
• D) $776,650

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Definitions:

Economic Profit

The economic result derived from subtracting a business's entire expenses, both explicit and implicit, from its total incoming funds.

Product Price

The amount of money required to purchase a good or service, determined by factors like production cost, market demand, and competition.

Optimal Output

The level of production at which a company can achieve the highest possible profit, balancing costs and revenues effectively.

Normal Profit

Normal profit is the minimum level of earnings necessary for a company to remain competitive in the market, covering its opportunity costs.