When the nations that constitute the Organization of Petroleum Exporting Countries (OPEC)restrict the supply of oil to increase their profits,the oil market:
A)achieves an efficient outcome because profits increase.
B)achieves an equitable outcome because the nations with oil resources receive the profits commensurate with that resource.
C)fails because there is no longer an efficient allocation of resources.
D)fails because there is no longer an equitable allocation of resources.

Question

Quizplus · Accepted Answer

When OPEC restricts the supply of oil, the market fails because the allocation of resources is no longer efficient. This is because the restricted supply leads to a shortage of oil, which can cause prices to increase and result in consumers being unable to purchase the oil they need. This can lead to inefficiencies such as hoarding, rationing, and predatory pricing. Additionally, the profits that OPEC countries receive from restricting supply come at the expense of other countries that rely on oil imports, which can lead to an inequitable allocation of resources.

When the Nations That Constitute the Organization of Petroleum Exporting