Final answer:
OPEC is considered a "cartel" because it is an organization of oil-producing countries that collectively sets prices and controls oil output to maximize profits. Its actions and agreements would be illegal for U.S. companies, but international law does not enforce such agreements strictly among OPEC members.
This corrct answer A
Step-by-step explanation:
The Organization of Petroleum Exporting Countries (OPEC) can be considered as a "cartel" which is a group of separate companies that collectively sets prices, controls output, or takes other actions to maximize profits. OPEC, formed in 1960 by oil-exporting nations, has members that include countries mostly in the Middle East, along with Venezuela, Angola, Nigeria, and Ecuador.
Historically, OPEC has demonstrated its influence several times, notably during the 1970s when its boycotts led to an energy crisis and an increase in oil prices.
In the context of the agreements between OPEC member nations to act like a monopoly, these arrangements are aimed at holding down output and keeping prices high in order to ensure high profits from oil exports.
However, such agreements are not legally enforceable because they are in a gray area of international law. If, for example, Nigeria decides to cut prices and sell more oil, another member like Saudi Arabia cannot sue Nigeria to enforce the agreement.
The reason OPEC can be described as a cartel is that it aligns with the common definition of cartels in economics where member organizations agree to work together to influence the market, commonly through setting prices and controlling supply, to maximize collective profits.
This practice would be illegal if performed by companies within the United States, but OPEC operates as an international entity which moves it outside the direct jurisdiction of U.S. laws.
This corrct answer A) sets prices, controls output, or takes other actions to maximize profits.