In October 2005, the U.S. Fish and Wildlife Service banned the importation of beluga caviar, the most prized of caviars, from the Caspian Sea. What happened in the market for caviar in the United States?
A) The supply curve shifted to the left.
B) The supply curve shifted to the right.
C) The demand curve shifted to the right.
D) The demand curve shifted to the left.
Answer: A
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If the percentage change in the quantity demanded of a good is less than the percentage change in price, price elasticity of demand is:
a. elastic. b. inelastic. c. perfectly inelastic. d. unitary elastic.
Answer the following statements true (T) or false (F)
1. If expectations are always met, then firms would never contribute to any of the short-run fluctuations in employment and output that are observed in real-world economies 2. If the prices of goods and services were flexible, then the economy could always produce at its optimal capacity. 3. An unexpected negative demand shock would lead to a decrease in inventories 4. An unexpected negative demand shock would lead to a decrease in real GDP. 5. Sticky prices could be the result of firms being afraid of price wars.