While the Size of the Tail in the Long Tail

question 61

Multiple Choice

While the size of the tail in the long tail phenomenon is disputable, one fact that is critical to remain above this debate is that:

• A) traditional brick and mortar retailers offer selections that cannot be rivaled by Internet pure-plays.
• B) energy costs and worker wages drive up the costs of running stores like Netflix.
• C) selection attracts customers, and the Internet allows large-selection inventory efficiencies that offline firms can't match.
• D) the turnover rate of obscure titles in traditional video rental stores is only slightly higher than those for Internet pure-plays.
• E) the cost of store maintenance and real estate makes stores such as Netflix unattractive.

---

Definitions:

Fixed Costs

Expenses that do not vary with production volume, such as rent, salaries, and insurance premiums.

Zero Profit

A situation where a business's revenues exactly match its expenses, resulting in no net profit.

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit, indicating how much each unit contributes to covering fixed costs.

Fixed Costs

Costs that do not vary with the volume of production or sales, such as rent, salaries, and insurance.