Question

DVDs can be produced at a constant marginal cost, and Roaring Lion Studios is releasing the DVDs for its last two major films. The DVD for Rambeau 17 is priced at $20 per disk, and the DVD for Schreck 10 is priced at $30 per disk. If the Lerner indices for Rambeau 17 divided by the Lerner index for Schreck 10 equals 0.5, what is the constant marginal cost of producing both DVDs?

Answer 1

Answer:

B) MC = $15

Explanation:

Base on the scenario been described in the question, the marginal cost (MC) is calculated using the following formula

To calculate marginal cost, divide the difference in total cost by the difference in output between 2 systems.

MC = 30-17/20-17

MC = $15