Which of the following describes a situation in which demand must be inelastic?
a. Total revenue decreases by 10 percent when the price of spats rises by 10 percent.
b. Total revenue decreases by less than 10 percent when the price of spats rises by 10 percent.
c. Total revenue increases by more than 10 percent when the price of spats rises by 10 percent.
d. Total revenue decreases by $10 when the price of spats rises by $10.
e. Total revenue decreases by more than $10 when the price of spats rises by $10.
C
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Based on the figure below. Starting from long-run equilibrium at point C, an increase in government spending that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ creating _____gap. 
A. D; an expansionary B. B; no output C. B; expansionary D. A; a recessionary
If a perfectly competitive firm sells 50 units of output at a market price of $10 per unit, its marginal revenue is:
A. more than $10. B. less than $10. C. $10. D. $500.
Explain why some costs are considered to be variable and some fixed. How does time enter into the definition?
In the classical model, a self-regulating market would
a. eliminate shortages or surpluses through price changes. b. eliminate shortages but not surpluses. c. render Say’s Law invalid. d. occur only in a labor market.