Assume the price elasticity of demand for MC Pretzel Co. pretzels is 0.8. If the company increases the price of each bag of pretzels, total revenue will
A. Increase because demand is elastic and revenue will rise.
B. Increase because the percentage increase in price is greater than the percentage change in quantity demanded.
C. Be impossible to predict because the percentage change in price is not known.
D. Decrease because fewer bags will be sold.
Answer: B
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Refer to the figure below.________ inflation will eventually move the economy pictured in the diagram from short-run equilibrium at point ________ to long-run equilibrium at point ________. 
A. Rising; A B. Falling; A; C C. Falling; B: C D. Rising; A; C
The free-rider problem is the absence of an incentive for
A) firms to produce public goods. B) people to use common resources. C) people to pay for what they consume. D) people to vote.
In the United States, the wage floor legislated by government below which it is generally illegal to pay workers is known as
A) the minimum wage. B) the wage ceiling. C) the employment gap. D) the going wage.
Cross elasticity of demand is:
A. Negative for complementary goods B. Negative for substitute goods C. Unitary for inferior goods D. Positive for inferior goods