Refer to the Information Provided in Figure 4

question 86

Multiple Choice

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 demanded of oil 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.

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Definitions:

OPEC

The Organization of the Petroleum Exporting Countries, a group consisting of 13 of the world's major oil-exporting nations.

Perfectly Competitive Market

A market in which all participants are price-takers.

Tacit Collusion

An unspoken, illegal agreement among competitors to avoid competing directly, often leading to higher prices.

Explicit Collusion

An overt agreement among firms within an industry to fix prices, limit production, or engage in other anticompetitive practices.