Answer to Question #105366 in Microeconomics for Mulaudzi Nhlaphu Nicolas

Question

Question.

1- What do u think is the main reason for joining and termination of membership by countries in OPEC(ORGANISATION OF THE PETROLEUM EXPORTING COUNTRIES). To answer this question ,reference must be made on the characteristics of oligopoly and its demand curve. (4 marks)

Answer 1

I think the main reason why countries joins OPEC is to "coordinate and unify the petroleum policies in order to ensure the stabilization of oil markets, secure an efficient, economic and regular supply of petroleum to consumers and steady income to producers.

Countries terminate their OPEC membership since they can't increase the crude oil production to fulfill their financial obligation because OPEC is the only one which can fixe the price of oil.

Its possible to determine the demand curve of a firm. This is because there is a huge interdependence among rivals.Rivals reacts in different ways when a firm changes its price and that makes the demand curve indeterminate