Discuss the market for gasoline and the Organization of Petroleum Exporting Countries (OPEC) role in determining price
What will be an ideal response?
The market for gasoline would be considered an oligopoly. There are a few countries that control the majority of oil that is produced in the world, allowing them to have some market power. These countries have formed a cartel called OPEC. The countries that form OPEC produce 43 percent of the world’s oil. OPEC nations have colluded to determine the optimal amount of production to maximize total profit in the industry. They do this by limiting production, so the price of oil remains above the marginal cost.
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If the U.S. dollar depreciates, it means that
a. the value of the U.S. dollar has increased b. the value of foreign exchange has decreased c. fewer U.S. dollars are required to purchase foreign exchange d. more U.S. dollars are required to purchase foreign exchange e. exports will immediately fall
Assuming price elasticity of demand is reported as an absolute value, a price elasticity of demand greater than one indicates demand:
A. for the good is elastic. B. for the good is inelastic. C. for the good is unitary elastic. D. cannot be determined without more information.