Case

n 1960 OPEC, or the Organization of Petroleum Exporting Countries, was make by Venezuela, Iran, Iraq and Kuwait. Later other major exporters such as Saudi Arabia joined the group. The purpose of OPEC was to restrict the amount of crude oil produced and exported. By restricting the production of oil, OPEC was able to essentially location oil costs and receive maximum network from the sale ofthis commodity. In economic terms OPEC is a cartel. A cartel is an government activity of independent particles that is able to create a monopoly over a given industry or commodity. OPECs member nations collectively project two thirds of all known oil reserves in the world. Oil is one of the worlds most important commodities.The unify States, as well as many other modify nations, uses oil to run its factories, transportation systems, power plants and other industries. Without an punk and available oil supply, the economy can contract to the acme of recession. CS Question #1: How does OPEC meet the definition of a cartel?   In 1973 OPEC began restricting the oil production of its member nations. The price for oil immediately inflated and the member nations profited greatly.

Since industrialized nations were so dependent on oil to run their industries, they were laboured to pay the higher prices and watch their own collective profits shrink. The effect of OPECs restrictions was felt throughout the world economy. Inflation roseate as almost every consumer good became more expensive. From the price of flatulency at the pump, to the price of white bread on the grocery store shelf, nearly all products became more expensive to the point of crisis. At service stations in the join States, long lines formed of people trying to buy gasoline for their cars. Many service stations ran out of gasoline to sell, man others rationed out the fuel by allowing each customer to buy only so much at a time. As inflation rose, investment fell and job issue shrank.The United States, as well as much of...

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