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
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 $77 worth of unleaded gasoline from one barrel of Alaska North Slope (ANS) crude oil. Because of its lower sulfur content, you can produce $78 worth of unleaded gasoline from one barrel of West Texas Intermediate (WTI) crude.
Assuming you currently have 10,000 bbl of WTI crude, the added benefit (cost) to you if you take the trade is closest to ________.
A) ($1550)
B) $1550
C) ($3475)
D) $3475
Answer: B
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