A Drop in the Price of a DVD Shifts the Demand

question 160

Multiple Choice

A drop in the price of a DVD shifts the demand curve for prerecorded video tapes leftward. From that you know DVDs and prerecorded tapes are

• A) inferior goods.
• B) complements.
• C) substitutes.
• D) normal goods.

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Definitions:

Profitable One

An entity or venture that generates income exceeding its costs and expenses, thereby yielding a surplus or profit.

MC > MR

A condition where the marginal cost of producing an additional unit is greater than the marginal revenue gained from selling it, indicating it’s not profitable to increase production.

Profit Maximized

The point at which a firm achieves the highest possible profit, typically by adjusting output levels or prices.

Total Revenue

The total amount of money that is brought in by sales of goods or services.