Quiz_163 - 61 In2009,Netflixwascharging$16..Althoughall ,...

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61) In 2009, Netflix was charging $16.99 per month to rent three DVDs at a time. Although all subscribers under this plan pay the same rate, they do not receive the same quality of service. Subscribers who rent the fewest movies per month have the best chance of receiving the latest releases (for which there is usually a wait list) and will typically receive their DVDs faster. Based on the information above, what can you conclude about the price elasticity of demand for Netflix DVD rentals? A) Subscribers who rent many DVDs per month are likely view DVDs as complements to movies at the theatre and therefore making this group wait longer for new releases will have a relatively small impact on demand for Netflix DVDs. B) Subscribers who rent many DVDs per month are likely to have a more elastic demand than subscribers who rent only a few DVDs per month. C) Subscribers who rent many DVDs per month are likely to have less elastic demand than subscribers who rent only a few DVDs per month. D) Subscribers who rent many DVDs per month are likely view DVDs as substitutes to movies at the theatre and therefore making this group wait longer for new releases will have a relatively small impact on demand for Netflix DVDs. 61) Answer: C Diff: 2 Page Ref: 530 - 531/530 - 531 Topic: Price Discrimination Learning Outcome: Micro 14: Discuss production and pricing decisions within monopolies and how public policies affect monopolies AACSB: Analytic Skills
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  • Spring '11
  • Lee
  • Economics, AACSB, Page Ref, Pentium 4

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