Question

8. In the past, the members of OPEC have been able to raise the relative price of petroleum by a large amount with a relatively small decrease in export volume, thereby increasing substantially the revenues they received from the buyers of their petroleum exports. Describe the likely shapes of the offer curves of the importing countries-shapes that enabled the OPEC countries to pursue their trade strategy successfully

Answer 1

Ans 8) Offer curve in simple terms represents international demand curve. When offer curves are inelastic, Price and revenue move in the same direction. That is a rise in price leads to higher revenue and fall in price leads to a fall in revenue. Thus we can say offer curves of oil importing countries are inelastic and were in backward-bending portion of their offer curve.