Natural Resource Cartels Such as OPEC Are Inherently Unstable Because

question 104

True/False

Natural resource cartels such as OPEC are inherently unstable because their members operate with excess capacity and have an incentive to cheat on their output quotas.

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Definitions:

NPV Projects

Projects that are evaluated based on the Net Present Value method, which calculates the present value of future cash flows minus the initial investment cost.

Debt/Equity Ratio

The ratio that highlights the proportional use of debt and shareholders' equity in asset financing for a company.

Stripped Common Shares

Common stock on which dividends and capital gains are repackaged and sold separately.

Dividends

Payments made by a corporation to its shareholders, usually derived from the company's profits, as a reward for investing in the company's equity.