If a Few Oil-Producing Countries in the Middle East Decide

question 171

Multiple Choice

If a few oil-producing countries in the Middle East decide to jointly limit the production of oil,

• A) they are forming a cartel.
• B) they would like the price of oil to be the same as if the market were perfectly competitive.
• C) game theory does not apply to their actions because they are nations, not firms.
• D) they will try to operate as a large, monopolistically competitive firm.
• E) they will agree to lower the price of oil in order to increase their profits.

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Definitions:

Imperfect Information

A situation where all parties in a transaction do not have the same or complete information, often leading to inefficiencies in decision making.

Best Choice

The best choice indicates the most suitable or advantageous option selected from a range of alternatives.

Mental Models

Internal representations of the outside world that individuals use to understand and interact with it.

Production Blocking

A phenomenon in group brainstorming sessions where the flow of ideas is inhibited because only one person can speak at a time.