A Local Video Store Estimates Its Average Customer's Demand Per

question 24

Multiple Choice

A local video store estimates its average customer's demand per year is Q = 7 − 2P,and it knows the marginal cost of each rental is $0.5.How much should the store charge for each rental if it engages in optimal two-part pricing?

• A) $0.35
• B) $0.5
• C) $0.7
• D) $1.00

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Definitions:

Technological Improvements

Enhancements or advancements in technology that increase productivity or efficiency in processes, products, or services.

Production Inefficiencies

Situations where resources are not used in the most productive way, leading to wastage and a lower output than potentially achievable.

Technological Breakthrough

A significant advancement in technology that dramatically changes the production process or market for goods and services, often leading to efficiency improvements and new opportunities.

Scarcity

The fundamental economic problem of having seemingly unlimited human wants and needs in a world of limited resources.