If your demand for renting videos is Q = 5

Question

If your demand for renting videos is Q = 5 - 2P, should you purchase the annual membership from a video store that charges $0.5 per rental, plus an annual membership fee of $12?
A)definitely yes.
B)definitely no.
C)probably yes.
D)cannot be decided.

Quizplus · Accepted Answer

The demand equation Q = 5 - 2P shows that as price (P) increases, quantity (Q) decreases. At $0.5 per rental, Q = 5 - 2(0.5) = 4 rentals. Without the membership, the cost is 4 * $0.5 = $2. With the membership, the cost is $12 + $2 = $14. Since $14 is more than $2, it is not worth purchasing the membership.