Which of the following statements below support how revenues of the relevant firms would change given the following events: Oil well in Eastern Pennsylvania close because of environmental violations reducing the annual revenue to drillers in eastern Pensylvania but a war in the Middle east shuts down oil wells across the entire Middle East and raises the revenue of Non Middle Eastern Producers.

Statements:

• The price elasticity of demand for oil is inelastic so a major decrease in world supply caused by War will cause the price of oil to rise by a greater percentage than the decrease in quantity demanded
• The loss of oil wells in eastern Pennsylvania will also cause the world price of oil to rise but by a smaller percentage than the decrease in quantity sold worldwide.
• The price elasticity of demand for oil is elastic so a major decrease in world supply due to War will cause the price of oil to rise by a greater percentage than the decrease in quantity sold.
• The loss of oil wells in eastern Penn will have almost no effect on world price although the revenue of eastern Penn producers will fall.

Answer choices:

• Only statement 1 is true
• Only statement 4 is true
• Statements 1 and 3 are true
• Statements 1 and 4 are true