In 1973 and again in 1979, the Organization of Petroleum Exporting Countries (OPEC) raised the world price of crude oil and increased their revenue as well. Which of the following is a TRUE statement regarding these OPEC price hikes?
A) Their revenue increased because the demand for oil was income inelastic.
B) Their revenue increased because the demand for oil was price inelastic.
C) Their revenue would have increased regardless of income elasticity or price elasticity because oil is an imported product for most nations.
D) Their revenue only increased because oil was already very expensive.

Question

Quizplus · Accepted Answer

The revenue increased because the demand for oil was price inelastic, meaning that consumers continued to purchase oil despite the price increase, leading to higher total revenue for OPEC.

In 1973 and Again in 1979, the Organization of Petroleum