Writing Assignment 3: OPEC Summit. DUE:
April 17.
Key objective: exemplifying the limitations
of the power of oligopoly due to short-term and long-term elasticities.
Setting: Imagine you are representing one of
the members of the OPEC, and you are motivated by an increase of your revenue
from the sale of crude oil. You have to compromise on current decision on
possible output decrease as to stimulate the world price of gas. Please
consider the historical relation of the reaction of the gas price at the pump
to the world price of the crude oil per barrel. Please resort to the NYU STERN
case on The Petroleum Market: 1970 ? 2000 (via link provided below the
assignment), but most of all to the research on the following issues in the
summer of 2008 in the US and now, and the political debate on the energy
crisis, environmental protection and renewable sources of
energy.
Instruction: As usually, please complete the
assignment discussing the relevant economics concepts and applying economic
tools with
supporting data for problem solving in this real-life imitating
simulation, and include also a memo summarizing the points of agreement to be
reached and followed by OPEC unanimously, and with the compliance in the
forthcoming months.
Outline: Include in the discussion the
following issues with data, as the basis for your common decision to be made:
? demand patterns for crude
oil in the World
? the price elasticity of
demand for gas in the US
? the factors influencing the
price elasticity of demand for gas in the US, and possible changes in this
respect (behavioral patterns)
? the impact of price changes
(on different price levels) on the revenue of crude oil exporters
? the income elasticity of
demand for gas
? the price elasticity of
supply of gas
? the effect on the market
outcome, on the market equilibrium, and on the efficiency of the market
? the effect on the
international trade, state policies, and on the economy.
WA
3 Grading Rubric & LOs
Grading Rubric
Max Points
Course LO
Program LO
Writing Assignment 3
OPEC Summit.
20
Demonstrate disciplinary knowledge of the complexities and
outreach of global economics and finance.
global understanding
Discuss and apply all concepts listed in the outline of
the assignment instructions in your historical and current global crude oil
market analysis.
4
disciplinary knowledge
Relate all the concepts to your points of agreement to be
reached and followed by OPEC unanimously based on the market conditions
examined by you, and the key objective of the assignment (exemplifying the
limitations of the power of oligopoly due to short-term and long-term
elasticities).
4
strategic thinking
Recognize all given assumptions and support your
consideration with complete data based on the market research of relevant
economic variables and trends.
4
disciplinary knowledge
Apply with full understanding relevant economic models and
tools for problem solving in real-life imitating simulation.
3
interdependencies in pursuit of welfare maximization
strategic thinking
Scrutinize your recommendation for importance, feasibility
of application, ethical implication, rational thinking, completeness, and
implementation limitations.
3
analyzing economic problems faced in the arena of business
and arriving at rational solution scenarios
strategic thinking, leadership,
ethical reasoning
Include a 1- page memo, references, supporting material,
and a graphic presentation with a compelling narrative in accordance with the
instructions.
2
managerial communication
Links
http://pages.stern.nyu.edu/~lcabral/teaching/teaching.html
Supplemental Resources
