Explain why OPEC cannot always maintain a high price of oil by restricting production?
What will be an ideal response?
OPEC members face a prisoner's dilemma problem. This cartel is unstable because each member country has an incentive to increase production slightly to gain more money at the higher world price of oil. The cartel fails because what is good for one country is good for every country.
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During a recession, unemployment compensation payments increase without the need for any government action. This increase is an example of
A) discretionary monetary policy. B) automatic monetary policy. C) automatic fiscal policy. D) discretionary fiscal policy. E) government expenditure, but it is not an example of either discretionary or automatic policy.
In a bilateral monopoly, the wage rate is likely to be ________ than the value of marginal product of labor and ________ than in a pure monopsony
A) lower; lower B) lower; higher C) higher; lower D) higher; higher
Arlene quits her $125,000-a-year job to take care of her ailing parents. What is the opportunity cost of her decision?
A) at least $125,000 B) It depends on the "going rate" for home-care providers. C) the value she attributes to the satisfaction she receives from taking care of her parents D) zero, since she will no longer be earning a salary
Improving agriculture's terms of trade involves
a. increasing the amount of goods available to farmers b. increasing the number of markets in which farmers can sell c. increasing the amount of credit available to farmers d. increasing the relative price of agricultural goods compared to manufactured goods e. none of the above