1. Assume that the price elasticity of demand for glass is 1.7 and the price elasticity of supply for glass is 0.8. If supply rises by 18%, the price of glass will

• A. rise by 7.2%.
• B. fall by 7.2%.
• C. rise by 13.88%.
• D. fall by 13.88%.

2. If the government imposes a maximum price for milk that is above the equilibrium price,

• A. demand for milk will be greater than supply.
• B. quantity demanded of milk will be less than quantity supplied.
• C. the available milk supply will have to be rationed.
• D. this maximum price for milk will have no economic impact.

3. If a firm is indifferent between operating and shutting down in the short run, then it must be true that

• A. total revenue equals fixed cost.
• B. total revenue equals total variable cost.
• C. total revenue equals total cost.
• D. fixed cost is zero.