In 2001,the prices of VHS movie tapes were practically identical while DVD prices for different movie titles varied considerably.What explanation can be given for this?
A)In 2001,VHS tapes were inferior goods while DVDs were luxuries.
B)In 2001,most VHS tapes were sold by discount retailers such as Wal-Mart; most DVDs were sold online.
C)In 2001,the price elasticity demand for VHS tapes was inelastic; for DVDs the price elasticity of demand was elastic.
D)In 2001,movie studies had determined their pricing strategies for VHS tapes but were unsure of the price elasticities of DVDs.

Question

Quizplus · Accepted Answer

Movie studios had determined their pricing strategies for VHS tapes since the technology had been around for a while, but they were unsure of the price elasticities of DVDs, which were a relatively new technology at the time, and thus had variable prices.

In 2001,the Prices of VHS Movie Tapes Were Practically Identical