In order to stabilize oil price in the world market, there is the need for...

Economics

WAEC 2010

In order to stabilize oil price in the world market, there is the need for OPEC members to

A. always have budget deficit
B. encourage competition among themselves
C. adhere to production quotas
D. fix the price of non-oil products

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Correct Answer: Option C

Explanation

One way OPEC members can work towards stabilizing prices of oil in the market is by obeying production quota set by the organisation. A production quota is a goal for the production of a good. By obeying the various quota set by the organisation, the market can be controlled and prices stabilized.

Quotas can be set high to encourage production, or can be set low and used to restrict production to support a certain price level.

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