Attempts: 2. Problems and Applications Q2 The New York Times (Nov. 30, 1993) rep

Question

Attempts: 2. Problems and Applications Q2 The New York Times (Nov. 30, 1993) reported that "the inability of OPEC to agree last week to cut production has sent the oil market into turmoil Average: 12 [leading to] the lowest price for domestic crude oil since June 1990." Statements The members of OPEC were trying to agree to cut production so they could lower the price. OPEC was unable to agree on cutting production because each country has a different production capacity. True False O The newspaper also noted OPEC's view "that producing nations outside the organization, like Norway and Britain, should do their share and cut production." What does the phrase "do their share" suggest about OPEC's desired relationship with Norway and Britain? OPEC would like Norway and Britain to join the cartel. O OPEC would like Norway and Britain to keep their production levels high. O OPEC would like Norway and Britain to act competitively. Grade It Now Save & Continue Continue without saving

Explanation / Answer

Ans:

1) False

The main purpose of cutting the production is not to lower the price but to increase the price. Cutting the production decreases the supply which will increase the price.

2) True

The main reason for not agreeing in cutting the production is each country has different capacity of production.

3) OPEC would like Norway and Britain to act competitively.

In this case do their share means it requires Norway and Britain to act competitively and be part of cutting the production.

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