Problem
Assume the elasticity of demand for oil is 0.7 and the initial quantity demanded is 100 million barrels a day. What is the impact of a 10 percent increase in the price of oil on the quantity of oil demanded? What happens to total expenditures? Assume that the United States initially imports 50 million barrels a day and that production remains unchanged. What happens to the level of imports and to expenditures on imports? Assume that in the long run, the elasticity of demand increases to 1. How does this change your answers?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.