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Dear Students Pl find attached below is Solved Case Study Example.

However I was shown University Circular , that no case study would be there in the exam.So we did not emphasize it Best of my wishes and good luck Badal MANAGERIAL ECONOMICS :CASE STUDY EXAMPLE

Competitive dynamics of OPEC countries is critical. In economics some words are considered notorious for their implications one such word is cartel. Everyone who saw God Father, would draw parallels to cartels clandestine motives and actions. After having established the objectives of forming OPEC, the oil producing countries cartelised international supply of oil and gas. Following critical economic statements have been made by world renowned economists about such cartelization.

Even if the OPEC countries produce oil at lower levels than their capacity, they would still have surplus, but the global oil supplies will be strangled. The OPEC members used this strategy to control global oil prices as early as in 1970s. However, by mid1980s OPEC was unable to withstand the competitive pressures from the non-OPEC countries. However OPEC countries are dominant cartel inglobal oil supplies

Questions

1. Analyse the effects of cartelisation on the producers and consumers 2. What differences exists in the operations of OPEC and non-OPEC countries in controlling and how does it effects Global Market equilibrium ANSWER:

1. Student must be aware of the concept of cartelization on Supply and Demand and prices.

In this case, OPEC can produce and earn surplus profit, even though they produce inefficient quantity(Less than MR=MC condition).Since , it does not follow economic efficiency and maximization of needs and wants of consumers, it is not good for consumers. However,producers are comfortable due to collective Cartel as Monopoly 2. Since Non-Opec Oil Producing countries are not cartelized, they tend to compete among themselves as well as with the OPEC Cartel, and it helps consumer substitute their needs, oil being homogeneous product. However, OPEC is bigger and controls suppliers,customers,New Enterants in the market by creating barriers to entry and so it will be a case of Dupoly , with Dominant Player.Student needs to understand, how Dupoly with dominant player create Market Equalibrium(PL REFER BOOK)