OPEC Periodically Meets to Agree to Restrict the Cartel's Oil

question 218

Multiple Choice

OPEC periodically meets to agree to restrict the cartel's oil output, and yet almost every member of OPEC produces more than its own output quota.This suggests that OPEC has

• A)a cooperative equilibrium.
• B)a noncooperative equilibrium.
• C)new potential entrants.
• D)a threat of substitute goods.

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Definitions:

CAPM

Capital Asset Pricing Model, a formula used to determine the expected return on an investment based on its risk relative to the market.

APT Model

Arbitrage Pricing Theory Model; a financial theory that estimates the returns on assets based on their exposure to various risk factors.

One Factor

In finance, refers to models or analyses that consider only a single variable or risk factor in their calculations.

CAPM

The Capital Asset Pricing Model, a model that describes the relationship between systematic risk and expected return for assets, particularly stocks.