1. A price-discriminating firm will charge a higher price to consumers with a relatively ________ (elastic/ inelastic) demand and a lower price to consumers with a relatively ________ (elastic/inelastic) demand.
2. The aspirin sold in airports is more expensive than aspirin sold in grocery stores because the demand for aspirin in airports is relatively ________.
3. The rationale for charging a higher price for a soft drink on a hot day is that demand is ________ (more/less) elastic on hot days.
4. Radiohead s pricing strategy will be profitable if the average payment per downloader is at least $3.00. ________ (True/False)
5. Senior citizens pay less than everyone else for admission to a movie, but the same as everyone else for popcorn because popcorn is ________, while admission is not.
6. The price of a hardback edition of a best-selling book is typically three times the price of the paperback edition because the demand from the eager consumers who buy hardbacks is relatively ________ (elastic, inelastic).
7. Trade-Offs from a Heat-Sensing Vending Machine. Suppose a soft-drink vending machine has a capacity of 180 cans and is filled every 10 days. The following table shows the quantities demanded on hot and cold days with different prices. The first row shows what happens with a single price of $2 and the second row shows what happens with heat-based pricing.

a. How does the switch to heat-based pricing affect the total quantity sold when there are 5 hot days and 5 cold days?
b. This occurs because the cold-weather consumers, who experience a lower price, have a ________ (more/less) elastic demand than hot-weather consumers, who experience a higher price.

Price Price Quantity Quantity Total Total on on of Cans of Cans Quantity Quantity Hot Cold Sold on Sold onof Cans Days Days Hot Days Cold Days Demanded Demanded: of Cans 5 Hot Days, 10Hot 20 15 5 Cold Days 150 175 Days 200 150 $2 $2 10 20