DVDs Can Be Produced at a Constant Marginal Cost of $5

question 119

Multiple Choice

DVDs can be produced at a constant marginal cost of $5 per disk, and Roaring Lion Studios is releasing the DVDs for its last two major films. The DVD for Rambeau 17 is priced at $20 per disk, and the DVD for Schreck 10 is priced at $30 per disk. What are the price elasticities of demand for these two movies?

• A) Both equal -1.2.
• B) -0.75 and -5/6, respectively
• C) -1.33 and -1.2, respectively
• D) -1.33 and -2, respectively

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Definitions:

Collection

The process of pursuing payments of debts owed by individuals or businesses.

Item

A single distinct object or unit, especially when part of a list or collection.

First Bank

Can refer to the initial banking institution established in a certain area or the primary bank that an individual or business chooses to use for financial transactions.

Substitute Check

A digital reproduction of the original paper check that is legally considered the same as the original for clearing and settlement purposes.