The ability of the Organization of Petroleum Exporting Countries (OPEC) to maximize profits is hampered by ?
Correct answer: D. economic recession for oil importing nations
- A. a lack of substitutes for oil
- B. similar cost schedules for member countries
- C. highly inelastic world demand curve for oil
- D. economic recession for oil importing nations
Explanation
An economic recession in oil-importing countries reduces oil demand, limiting the quantity OPEC can sell at a profitable price. A lack of substitutes and inelastic demand would generally strengthen, not weaken, OPEC’s pricing power.
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