In January of 2014, Rogers cable was offering new customers cable TV, internet access, and a PVR, for $19.95 a month.Renting just a PVR from Roger's would cost existing customers $25.07 a month.What can you conclude about the price elasticity of demand for Rogers cable TV, internet access, and PVR rental?
A)Existing subscribers likely have more elastic demand than potential new subscribers.
B)Existing subscribers are likely to have less elastic demand than potential new subscribers.
C)Existing subscribers are likely to view cable TV and internet as substitutions and thus not be interested in this bundle.
D)New subscribers are the only ones likely to view TV and internet as complements.

Question

Quizplus · Accepted Answer

The fact that Rogers is offering a lower price to new customers suggests that they are trying to attract more customers with a more elastic demand. Existing subscribers, on the other hand, are already paying a higher price for just the PVR rental, which suggests a less elastic demand. Therefore, existing subscribers are likely to have less elastic demand than potential new subscribers.

In January of 2014, Rogers Cable Was Offering New Customers