5 Suppose that the United States and other oil-importing nations levied a tariff on crude oil that was equal to the import price (approximately $34 per barrel in 1 982)

minus $20 per barrel. Thus, an increase in the i mport price (above $20 per barrel) would automatically raise the tariff by an equal amount. What impact would this policy have on

(a) U.S. consumption of foreign oil, (b)

·

the elasticity of demand for foreign oil as seen by foreign producers, and

(c) the incentive of the international oil cartel (OPEC)

to raise its price for oil?