Explain what the Saudi oil minister meant when he warned OPEC of using its market power too much by saying "Remember, the Stone Age did not end because we ran out of stones."
What will be an ideal response?
The oil minister warned that if OPEC uses its market power to raise oil prices too much, there is a stronger incentive for entrepreneurs to come up with alternatives to oil -- and once a cost-effective alternative is developed, that competition may reduce or eliminate the monopoly power of OPEC.
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If real GDP is $13,000 billion and aggregate hours are 270 billion, labor productivity equals
A) $6.50 per hour. B) $45 per hour. C) $48 per hour. D) $650 per hour.
Given that most banks have positive gap and negative durations, banks prefer
A) lower market interest rates. B) higher market interest rates. C) higher market fixed rates but lower market floating rates. D) either higher or lower market interest rates since interest rates have little effect on bank profits.
If nominal wage rates increase by 5 percent per year and the price level increases by 3 percent per year, which of the following is correct?
a. Real wages will increase by 2 percent per year. b. Real wages will increase by 3 percent per year. c. Real wages will decrease by 3 percent per year. d. Real wages will decrease by 2 percent per year. e. Real wages will remain constant.
For an investment to be considered autonomous, it must
A. include fixed components. B. increase as the level of income increases. C. be independent of the level of real disposable income. D. be negatively related to the interest rate.