If OPEC is an effective cartel,

Question

Quizplus · Accepted Answer

The main reason for the formation of OPEC was to control and manipulate oil prices by setting output quotas for its member countries. Therefore, the correct answer is C, as members of the cartel agree on output quotas in order to control prices. Choice A is incorrect because demand changes can have an impact on prices, but they are not the main factor that affects price changes in a cartel. Choice B is also incorrect because output changes are not dictated by changes in demand, but rather by the agreement among cartel members on production levels.

If OPEC Is an Effective Cartel