Why was OPEC unable to maintain high oil prices in the long run?
A)Demand and supply are both elastic in the long run compared to the short run.
B)Demand and supply are both inelastic in the long run compared to the short run.
C)Demand is elastic and supply is inelastic in the long run compared to the short run.
D)Demand is inelastic and supply is elastic in the long run compared to the short run.

Question

Quizplus · Accepted Answer

In the long run, both demand and supply become more elastic as substitutes become available and investments can be made in new production technologies. This means that if OPEC tries to maintain high oil prices, buyers will be more likely to switch to alternative energy sources or find ways to decrease their oil consumption, while at the same time other oil producers may increase their production to take advantage of the higher prices. As a result, OPEC's market power will diminish and it will struggle to maintain high prices in the long run.

Why Was OPEC Unable to Maintain High Oil Prices in the Long