The Organization of Petroleum Exporting Countries (OPEC) Is an International

question 255

Multiple Choice

The Organization of Petroleum Exporting Countries (OPEC) is an international cartel. If the cartel were to hire a consulting firm to monitor the production rates of member countries, the economic reason for this monitoring would be to

• A) make sure that each member country is producing at an output level at which price equals marginal cost.
• B) make sure all the member countries produce at least their quotas so that there will be no oil shortage.
• C) detect those member countries that are depressing prices by producing more than their assigned quotas.
• D) make sure that the marginal revenue for the last barrel of oil sold by each member country is less than its price.

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Definitions:

Household Income

The combined gross income of all members of a household, considered together for the purposes of tax and welfare.

Annual Income

The total amount of money earned by an individual or entity within a calendar year, from all sources including wages, investments, and bonuses.

Income Distribution

The way in which total income is shared among the members of a society.