Explain the market structure for OPEC, issues related to price of oil and long run profits.
The price for a barrel of oil has recently decreased after experiencing record increases in prices over the past year or so.
Please answer the following questions
1. What type of market structure is OPEC?
2. Illustrate what are some important issues which OPEC must confront in their efforts to control the price of oil?
3. Would you expect OPEC to experience profits in the long-run? Please explain fully. Hint: Make sure you include possible reactions to the higher prices.
4. Were there any responses to the record high prices for oil? If yes, what were they?