Cal's Barber Shop has charged $15 for a haircut for years. He gets the same steady 100 customers a week. But his store rent just increased by $400 a month. Cal decides to increase his price by $1, or 7%. The next week the same 100 customers showed up. This teaches Cal that his haircuts are:

13. Elastic ______ Inelastic _______

14. Cal gets excited by this result. He therefore raises his price by $4, to $20, or another 25% increase. The following week he gets 70 customers. This teaches Cal that:

1. _____ His haircuts are price inelastic
2. _____ The amount of price elasticity may depend upon the size of the price change
3. _____ Cal should get into another line of work
4. _____ Cal shouldn't pay attention to economic theory