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:

Operant Conditioning

A method of learning that occurs through rewards and punishments for behavior.

Spontaneous Recovery

The reappearance of a response (conditioned response) that had been extinguished after some time has passed without exposure to the conditioned stimulus.

Respondent Behavior

Behavior that occurs as an automatic response to a certain stimulus, not requiring conscious thought.

Sniffing

The act of inhaling through the nose to detect smells, which can also refer to the abuse of inhalant substances for recreational purposes.