-The Above Figure Shows the Demand Curve for Movie Rentals

question 397

Multiple Choice

-The above figure shows the demand curve for movie rentals from Blockbuster. Which of the following is true?

• A) Consumer expenditure on movie rentals will always increase whenever Blockbuster lowers its price.
• B) Blockbuster will receive more total revenue if it charges $4.00 per movie rental rather than $3.00.
• C) The price elasticity of demand for movie rentals falls as Blockbuster raises its price.
• D) The demand for movie rentals is more price inelastic at $1.00 than it is at $1.50.

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Definitions:

Original Cost

The initial purchase price or investment made in acquiring an asset, including any related acquisition costs.

Leasehold

An interest in land or property which is held on a lease.

Lessor

A person or entity that rents out property or equipment to another party, known as the lessee, under the terms of a lease agreement.

Lessee

A person or entity that leases or rents property or equipment from another, known as the lessor.