In Order to Make Oil Profits as Large as Possible

question 38

Multiple Choice

In order to make oil profits as large as possible, OPEC meets to set oil production quotas for its members. OPEC is best classified as a:

• A) monopoly.
• B) cartel.
• C) kinked demand industry.
• D) price-leadership industry.

Interpret cost curves and their relevance to production and shutdown decisions.

Assess the role of economic profits and losses in market entry and exit decisions.

Understand the concept of shutdown point and how it affects firm's decisions.

Calculate firm's profit or loss based on cost data and market prices.

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Definitions:

Laptop Computers

Portable personal computers suitable for mobile use.

Net Realizable Value

The estimated selling price of goods, minus the costs of their completion and disposal.

Journal Entry

A record in accounting that signifies a transaction and affects the balance sheet and income statement.

Inventory Write-down

A reduction in the value of inventory to reflect its current market value below its listed cost.