Because the price elasticity of demand for OPEC oil is approximately .08, in order to increase revenues OPEC should:
Lower price in order to increase revenues
Lower price in order to decrease the amount of oil sold
Rise price in order to increase the amount of oil sold
Raise price in order to increase revenues
Correct Answer :
D. Raise price in order to increase revenues
because the elasticity of demand of oil is inelastic (less than one) so there is no benefit of decreasing price to increase quantity demanded so OPEC will increase price to increase its revenues.}
Related Questions
A firm considering what type of new plant to build is involved in a:
Immediate-run decision
Market period decision
Short-run decision
Long-run decision
Price discrimination is possible:
When elasticities of demand in different markets are the same at the ruling price
When elasticities of demand are different in different markets at the ruling price
When elasticities cannot be known
When elasticities of demands are zero in different markets at the rulling price
An income demand curve of an inferior good is:
Upward sloping
Downward sloping
Constant in slope
None of the above
When was Adam Smiths major work An Enquiry into the Nature and Causes of Wealth of Nations published?
1756
1777
1776
1801
A demand curve is not related to:
The price of the commodity
The time period
The price of substitutes
Any of the above
According to Robbins, economics is a:
Science of wealth
Science of national welfare
Science of optimality
Science of scarcity
Demand for a commodity is elastic when it has
Only one use
Many uses
Uses which cannot be postponed
Uses very essential for the consumer
If as a result of a decrease in price, total outlay (expenditures) on a commodity increases, its price-elasticity of demand is:
Perfectly elastic (infinitely elastic)
Relatively elastic (greater than one elasticity)
Unit elastic
Relatively inelastic (less than one elasticity)
The general markets results from the imposition of price ceilings has been:
Higher prices
Increased prices
Increased consumption
Shortage of products
In case of giffin good, price effect is:
Positive
Negative
Neutral
Infinite
The cost of firms in cournot model are:
identical
differential
very high
very low
For the given production function, technical efficiency is defined as:
Sets of points relating production function that maximizes output given input (labor) i.e. Q = f(L, K)
Sets of points relating production function that produces less output than possible for a given set of input (labor) i.e. Q < f(L, K)
Use of imported technology
None of the above
Marginal Productivity Theory deals with the theory of:
Distribution
Exchange
Market structure
Consumer behaviour
According to current thinking, the law of diminishing returns applies to:
All fields of production
Agriculture
Mining
Manufacturing
Indifference curve approach (ordinal approach) is superior to utility approach (cardinal approach) because:
In ordinal approach we can separate the income effect from the substitution effect of a price change
In ordinal approach we can study the consumer behavior more closely
In ordinal approach the consumer is assumed more rational
In ordinal approach the consumer has more income
A market demand schedule is obtained by adding individual demand schedules:
Horizontally
Vertically
Permanently
Perpetually
Entry of new firms into a competitive market will shift the supply curve of the:
Firm to the left
Industry to the right
Firm to the right
Industry to the left
The falling part of total Utility (TU) curve shows:
Increasing marginal utility
Decreasing marginal utility
Zero marginal utility
Negative marginal utility
If the supply curve is not a straight line but curvilinear, the elasticity on all points of the supply curve is:
Equal
Different
Zero
Infinity
Cournot equilibrium is attained where two reaction curves:
Repel each other
Represent each other
Intersect each other
None of the above
The game theory concentrates on:
Gaming
Strategic decisions
Both a and b
None of the above
The cobweb model will convergent when the slope of:
Demand curve is more than supply curve
Supply curve is more than demand curve
Supply curve is equal to demand curve
None of the above
Under conditions of perfect competition, price in the long-run is equal to:
Minimum of average variable cost
Minimum of marginal cost
Minimum of average fixed cost
Minimum of average cost
The law of variable proportions comes into being when:
All factors are variable
There is a fixed factor and variable factor
All factors are non-variable
None of the above
If the price of Pepsi Cola goes down, you would predict:
An increase in supply of coca cola
A decrease in supply of coca cola
An increase in demand for coca cola
A decrease in demand for coca cola
Which is the other name that is given to the average revenue curve?
Profit curve
Demand curve
Average cost curve
Indifference curve
A typical demand curve cannot be:
Convex to the origin
Concave to the origin
A straight line
Rising upwards to the right
In monopoly:
The producer will often produce a volume that is less than the amount which would maximize the social welfare.
The producer will often produce a volume that is more than the amount which would maximize the social welfare.
The consumers will often consume a volume that is more than the amount which would maximize the social welfare.
None of the above
If the commodity is normal then Income Effect (I.E) is:
Negative
Positive
Zero
Infinite
Equilibrium of a firm represents maximization of profits as well as:
Maximization of losses
Minimization of losses
Minimization of profits
None of the above