Correct Response: A. The Organization of Petroleum Exporting Countries (OPEC) influences the world oil market by manipulating the supply. This is achieved by having member states place a cap on production, or limit the amount of oil they are willing to produce for the global market. This in turn reduces supply and, given that demand is high and inelastic, that causes the price of petroleum to increase. OPEC does not offer subsidies to producers (B). Decreasing demand would require decreasing the use of petroleum, which has proved to be very difficult (C). OPEC reduces supply and allows prices to be set by the market; OPEC does not establish the price of petroleum on the market (D).
