Q 1. OPEC currently produces about 38 per cent of the world output of oil. Assuming the short-term price elasticity of demand, estimate the effect of the output cut on the current price, stating any assumptions in your calculations. 2. Describe the factors currently driving the world demand for oil; why has the price not fallen below the $20 level as many expected? 3. Explain the effect of other non-OPEC producers on the cartel’s output decisions.