Suppose 5% of the People Who Buy a Certain Type

question 20

Multiple Choice

Suppose 5% of the people who buy a certain type of DVD player return it to get their money back.The DVD player costs $100.What is the expected loss, per customer, for the company due to returns (ignoring the monetary value of the returned DVD player) ?

• A)$5
• B)$0; most people don't return it
• C)Either $0 or $100, but it is impossible to determine which.
• D)$100

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Definitions:

Supply Curve

A graph showing the relationship between the price of a good and the quantity of that good that sellers are willing to supply.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded.

Actual Price

The price at which a good or service is sold, not considering discounts or adjustments.

Consumer Surplus

The difference between the total amount that consumers are willing to pay for a good or service and the total amount that they actually pay.