Article Review CW

Research (Google it or use AI) the term "allocative efficiency." What is the definition of this term?

• Allocative efficiency is achieved when production costs are minimized regardless of societal welfare.
• Allocative efficiency occurs when resources are distributed equally among all individuals.
• Allocative efficiency is achieved when resources are allocated in a way that society most desires, maximizing total societal welfare.

• Allocative efficiency is when a single entity controls all resources in an economy.

What reasons does the article, "Understanding Perfect Competition in Real-World Markets," give for the wheat industry as a good example of a perfectly competitive market?

• The wheat industry has a single seller controlling the market, consumers can't seek out lowest prices, and wheat is an extremely volatile good.

• The wheat industry is a good example of a perfectly competitive market because it has many buyers and sellers, a homogeneous product, and each farm is relatively small compared to the overall size of the market.

• Wheat is a unique product with no close substitutes and has very little competition due to the fact that only a few large wheat farms control all of the wheat production in the US.

• There are high barriers to entry for new wheat producers, consumers don't have much of a say in seeking out the lowest prices, and farms have little to no competition.

The article on wheat farmers mentions that wheat producers are "price takers." What does this mean?

• Wheat producers can influence the market price significantly. This means that any one wheat farmer has a significant amount of power to influence prices in the market for wheat.

• Wheat producers set their own prices based on supply, meaning wheat prices are very different depending on what farm you buy from.

• Wheat producers are guaranteed a fixed price for their crops. The US sets the price for wheat across all wheat farms in America.

• Wheat producers are 'price takers' because they accept the market price and cannot influence it. If they charge a higher price than other farmers, people won't buy from them anymore.

If the supply of wheat in any particular year is abundant (possibly due to good weather or advances in technology), the supply curve for wheat will shift right. What will happen to prices for wheat? If one farmer is able to sell wheat for a lower price, will other farmers typically also lower their prices?

• Prices for wheat will increase; all farmers must lower their prices. according the USDA.

• Prices for wheat will remain the same; farmers have no choice in pricing.
• Prices for wheat will fluctuate wildly; farmers will raise their prices.
• Prices for wheat will decrease; other farmers may also lower their prices to stay competitive.

Google or use AI to research the acronym, OPEC. What is OPEC?

• OPEC is the Organization of the Petroleum Exporting Countries.
• OPEC stands for Oil Producers and Exporting Countries.
• OPEC is the Organization of Petroleum Engineers.
• OPEC is a global organization for renewable energy sources.

Google or use AI to answer the following questions: when was OPEC formed? Who were the largest participating countries in OPEC? What percentage of oil do OPEC countries control today?

• OPEC was formed in 1975; largest members include Venezuela, Nigeria, and Kuwait; they control about 25% of global oil.
• OPEC was formed on January 1, 1950; largest members include Russia, Canada, and the USA; they control about 60% of global oil.
• OPEC was formed on December 12, 1965; largest members include Qatar, Angola, and Libya; they control about 50% of global oil.
• OPEC was formed on September 14, 1960; largest members include Saudi Arabia, Venezuela, Iraq, and Iran; they control about 40% of global oil.

Refer to the article, "Gas Price Fixing Scandal Grows as Another US Oil Exec Caught 'Colluding with OPEC.'" Why did the Federal Trade Commission ban Jon Hess, CEO of the Hess Company, from participating on the board of executives?

• Jon Hess was banned for failing to report financial earnings and tax evasion.

• Jon Hess was banned for environmental violations, including excessive pollution and dismissal of government regulations.

• Jon Hess was banned for insider trading activities related to the stock market.

• Jon Hess was banned for colluding with OPEC to fix gas prices. and keep them artificially high to increase profits.

What is the definition of collusion, as it relates to price fixing in the article about Jon Hess and OPEC?

• Collusion is a strategy to lower production costs top make higher than usual profits.

• Collusion is an agreement between firms to fix prices so that American would pay higher prices for gas than supply and demand would naturally generate.

• Collusion refers to a competitive pricing strategy to help consumers be able to afford goods and services at lower prices.

• Collusion is a legal agreement to share market information. in hopes to better each companies position in the stock market.

The FTC estimated in the article that average American spent this much more on gas per year, per each vehicle, due to the collusion and price fixing that was taking place by big oil executives...

• $1,000
• $2,000
• $500
• $750

Who is the largest oil company in the US and what are their estimated 2024 earnings?

• Hess Corporation, $175 Billion

• Chevron, $590 Billion

• ExxonMobil, $340 Billion