1) Until recently, Cynthia's Cycles rented bicycles for $8 and they rented 320 bicycles per month. They just raised the price to $12 and as a result, they only rent 280 bicycles per month.

Using the midpoint rule, find the price elasticity of demand for Cynthia's Cycles.

2) Until recently, Cynthia's Cycles rented bicycles for $8 and they rented 320 bicycles per month. They just raised the price to $12 and as a result, they only rent 280 bicycles per month.

Is the demand for the bicycle rentals elastic, inelastic, or unitary elastic?

a) elastic

b) inelastic

c) unitary elastic

Did the total revenue increase, decrease, or stay the same with the change in price?

a) increase

b) decrease

c) stay the same

3) For each of the following pairs of goods, tell me which of the two goods you predict would have moreelasticdemand. Briefly explain why.

(a) Required textbooks OR Romance novels

(b) All movie tickets OR Tickets to movies in 3D

(c) One of many Chinese restaurants in a city OR the only Indian restaurant in town