If the percentage change in quantity demanded for a good is larger than the percentage change in its price, then the price elasticity of demand of the good is said to be:
a. elastic

Monopolistically competitive firms produce differentiated products

Indicate whether the statement is true or false

Kara's Kittens typically produces and sells at its optimal (lowest per-unit cost) level of 30 scratching posts per week. Kara's also maintains an inventory of 20 scratching posts. If prices are sticky and there is a positive demand shock this week resulting in demand for 40 scratching posts, we would expect Kara's to:

A. sell the additional scratching posts out of its inventory and rebuild the inventory later when a negative demand shock occurs. B. permanently expand production to 40 scratching posts per week. C. raise prices on scratching posts. D. introduce a new line of scratching posts.