Use the Information for the Question(s) Below

question 7

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:

Consumer Surplus

The difference between the total amount that consumers are willing to pay for a good or service and the total amount they actually do pay.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, indicating the economic benefit to consumers.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service and the actual amount they receive.