Redbox Rents DVDs for $1 Per Day Via Self-Service Kiosks

question 250

Multiple Choice

Redbox rents DVDs for $1 per day via self-service kiosks located across the United States. In 2007, each kiosk averaged about 50 rentals per day. Suppose Redbox increases their daily price to $1.50. What is the price elasticity of demand if rentals decrease by 20 per day?

• A) 1.25
• B) 1.33
• C) 1
• D) 0.8