If a Few Oil-Producing Countries in the Middle East Decide

question 54

Multiple Choice

If a few oil-producing countries in the Middle East decide to jointly limit the production of oil,

• A) they are forming a cartel.
• B) they will agree to lower the price of oil in order to increase their profits.
• C) they will try to operate as a large, monopolistically competitive firm.
• D) game theory does not apply to their actions because they are nations, not firms.
• E) they would like the price of oil to be the same as if the market were perfectly competitive.

---

Definitions:

Anticipatory Breach

When one party indicates before the time of performance that they will not fulfill their part of the contract.

Performance

The execution or accomplishment of work, acts, feats, or functions as specified in a contract or agreement.

Repudiation

The rejection or denial of a duty, obligation, or contract.

Anticipatory Breach

An expressed or implied declaration by one party to a contract that they do not intend to fulfill their future obligations under the contract.