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:

Chunking

A memory technique that involves organizing information into manageable and meaningful groups or units to enhance recall.

Semantically

Relating to meaning in language or logic, especially in terms of the relationship between signifiers and what they stand for or represent.

Personally Meaningful

Pertaining to or having significance on a personal level, often invoking a sense of relevance or importance to an individual.

Working Memory

A cognitive system responsible for temporarily holding information available for processing and is important for reasoning and the guidance of decision-making and behavior.