Another oil refiner is offering to trade you 10,150 bbl of Alaska North Slope (ANS) crude oil for 10,000 bbl of West Texas Intermediate (WTI) crude oil. Assuming you currently have 10,000 bbl of WTI crude, what should you do?
Alaska North Slope Crude Oil (ANS) $71.75/bbl
West Texas Intermediate Crude Oil (WTI) $73.06/bbl
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.
A) Sell 10,000 bbl WTI crude on the market and use the proceeds to purchase and refine ANS crude.
B) Do nothing; refine the 10,000 bbl of WTI crude.
C) Trade the 10,000 bbl WTI crude with the other refiner and refine the 10,150 bbl of ANS crude.
D) Trade the 10,000 bbl WTI crude with the other refiner and then sell the 10,150 bbl of ANS crude.
Answer: A
You might also like to view...
The integrated use of training and development, organizational development, and career development to improve individual, group, and organizational effectiveness
What will be an ideal response?
Suppliers offer resellers a ________ to encourage them to pay for goods immediately
a. allowance b. payment discount c. quantity or volume discount d. trade or functional discount