Question

1. Most economists believe that OPEC is highly overrated as a cartel because the Prisoner’s Dilemma undermines any attempt to fix prices. Show this, using the simplifying assumption that OPEC consists of two countries: Kuwait and Nigeria.

Answer 1

Ans:In 1960,OPEC that means "Organisation of the Petroleum Exporting countries"is  presently the  worlds largest oil cartel and they also maintain a three worlds largest oil reserves.when we talk about cartel it is build off 14 countries and they jointly report a half of the worlds oil production and they also give a great impact on its cost.

In 2016, they were accompanying 39 million drums of oil to the trade in day by day, out of 92 million produced. around the world. And now a days the oil business influenced by the American multinationals, now they throb to the strain of OPEC.

And also,there is a shift in the price of the oil with the changes they immense in this sector. This is because of only thing that is prisoners dilemma.

Kuwait is one of the popular country that is having a highest OPEC members.and therefore Kuwait is actually having a thriving economy and they also contain an oil an gas section of about 40 percentage of its whole domestic product and about 90 percentage of its export income.

And another most popular country within OPEC is Nigeria,they have around 203 million population.Aside from petroleum, Nigeria’s other natural resources include natural gas, tin, iron ore, coal, limestone, niobium, lead, zinc etc. The oil and gas sector contain for about 10 per cent of gross domestic product, and petroleum exports revenue represents around 86 per cent of total exports income.

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