Suppose that OPEC currently sets the oil price at $1.50 per gallon, and the current consumption is 100 million gallons per day. The price elasticity of demand for oil is estimated to be 0.7 by the initial value method. If OPEC raises the oil price to $1.80 per gallon:
A. quantity demanded decreases by 10 million gallons while total sales revenue increases by $4.4 million per day.
B. quantity demanded decreases by 14 million gallons while total sales revenue increases by $4.8 million per day.
C. quantity demanded decreases by 10 million gallons and total sales revenue decreases by $4.4 million per day.
D. quantity demanded decreases by 14 million gallons and total sales revenue decreases by $4.8 million per day.
Answer: B
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