The Problems Encountered by the OPEC Cartel Can Be Explained

question 27

Multiple Choice

The problems encountered by the OPEC cartel can be explained by:

• A) relatively high barriers to entry existing in the petroleum industry.
• B) the fact that most OPEC producers had similar levels of reserves.
• C) the small number of producers who made up the cartel having the same objectives.
• D) the fact that OPEC did not have significant barriers to entry for new producers.

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Definitions:

Flotation Cost

The expenses incurred when a company issues new securities, including underwriting fees, legal fees, and registration fees.

Corporate Tax Rate

The corporate tax rate is the percentage of a corporation's income that is seized by the government as tax.

Net Income

The total earnings of a company after all expenses and taxes have been subtracted from total revenue.

Notes Payable

A written promise to pay a certain amount of money, usually including interest, by a specified date or on demand.