File-Sharing Programs Such as Napster,Kazaa,and IMesh Make It Possible for Individuals

question 22

Multiple Choice

File-sharing programs such as Napster,Kazaa,and iMesh make it possible for individuals to exchange music files over the Internet.All else constant,which of the following statements best describes how the development of these programs has affected the retail market for new music CDs?

• A)Demand for CDs has decreased, causing equilibrium price and quantity to decrease.
• B)Demand for CDs has increased, causing equilibrium price and quantity to increase.
• C)Demand for CDs has decreased, causing equilibrium price to decrease and equilibrium quantity to increase.
• D)Demand for CDs has increased, causing equilibrium price to increase and equilibrium quantity to decrease.

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Definitions:

Net Operating Income

A financial metric that calculates a company's profitability by subtracting operating expenses from its total revenue, excluding taxes and interest.

Product Line

A product line is a group of related products marketed under a single brand by a company, aimed at fulfilling related needs of a market segment.

Segmented Statements

Financial documents that divide a company's financial performance into segments, allowing for a more detailed analysis of different business units or product lines.

Contribution Format

An income statement format that separates fixed and variable costs, highlighting the contribution margin of products sold.