A Member of a Cartel Like OPEC Has an Incentive

question 245

Multiple Choice

A member of a cartel like OPEC has an incentive to

• A)argue for larger production quotas for each member of the cartel.
• B)agree to a low cartel production level and then produce more than its quota.
• C)abide by its individual production quota.
• D)support equal production quotas for each member.

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Definitions:

Unit Product Cost

The total cost associated with producing a single unit of product, including direct materials, direct labor, and allocated overhead.

Absorption Costing

An accounting practice that aggregates all costs related to making a product, including the expenses for direct materials, the wages for direct labor, and every overhead cost, fixed or changing, into the product’s pricing.

Net Operating Income

The profit generated from a business's operations after subtracting operating expenses from operating revenues.

Variable Costing

A method of costing that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in the cost of a unit of product.