The Organization of Petroleum Exporting Countries (OPEC)is considered a cartel by economists because the
A) firms agree to restrict output in order to increase prices and profits.
B) firms are controlled by the government.
C) firms in the cartel sell a homogenous (undifferentiated product).
D) firms sell a product with few substitutes.
E) organization is international and thus not subject to antitrust laws.

Question

Quizplus · Accepted Answer

OPEC is considered a cartel because its member countries agree to limit oil production in order to increase prices and maximize profits. This is a characteristic of a cartel in which firms collude to restrict output and raise prices, ultimately reducing consumer choices and increasing profits.

The Organization of Petroleum Exporting Countries (OPEC)is Considered a Cartel