Build spreadsheet model to optimization model of opec cartel

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Reference no: EM132223602

OPEC controls the supply of crude oil in the world market. Demand for oil depends on the price set by OPEC. Higher prices induce greater conservation by consumers, leading to lower demand for oil. Suppose any price above $150 per barrel will choke off all demand, while every dollar drop in the price below $150 will increase the market demand by 8 million barrels per month. Suppose the cost of producing oil is $10 per barrel.

• What price should OPEC set?

• How would this price and OPEC’s profit change as the demand choke-off price varies over $100 to $200 range?

Build a spreadsheet model to answer the optimization model of the OPEC cartel.

Reference no: EM132223602

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