The Ability of OPEC Nations to Operate as a Successful

question 52

Multiple Choice

The ability of OPEC nations to operate as a successful cartel tend to decrease as

• A) the number of members of the cartel decline.
• B) the cost of production differences among the cartel members rises.
• C) the demand for oil rises in the world market.
• D) the availability of substitutes for OPEC oil falls.

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Definitions:

Compensating Variation

A monetary measure of the amount of income required to return an individual to their original utility level after a price change.

Price Increase

A rise in the cost of goods or services, which can occur due to various factors including increased production costs, higher demand, or inflation.

Optimal Bundle

The combination of goods and services that maximizes an individual's utility given their budget constraint.

Original Prices

The initial cost or value of goods and services before any discounts, markdowns, or adjustments.