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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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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