If OPEC, a group of oil producing nations, cuts oil production to increase the total revenue, OPEC presumes that the demand for oil is
A) perfectly elastic.
B) unit elastic.
C) elastic.
D) inelastic.

Question

Quizplus · Accepted Answer

If OPEC cuts oil production to increase total revenue, it presumes that the demand for oil is inelastic, meaning that consumers will not significantly reduce their quantity demanded despite higher prices, leading to higher total revenue.

If OPEC, a Group of Oil Producing Nations, Cuts Oil