1. Suppose a hotel raises the price of the bottled water in the minibar in each room from $3 to $5. The hotel tracks the number of customers who buy the bottled water and finds that consumption drops from 1000 bottles a week to 900 bottles. Do you think demand is elastic or inelastic? Please explain your logic.

2. Whose demand for bottled water is likely to be more elastic at the hotel, Bill Gates's or Mark Trueman's? Please explain your reasoning.

3. What cross-price elasticity coefficient values would you expect to see between bottled water and canned drinks (e.g., carbonated beverages, juices) at hotels. Explain your reasoning.

4. Suppose that travelers become OUTRAGED that hotels are charging so much for bottled water and successfully lobby the government for a nationwide $1 per bottle price control. What type of price control do you think this is, and do you think it would serve as a binding or non-binding constraint? Please explain if you think this would be a good idea or a bad idea, and whether or not there might be any unintended consequences of such a price control.