Discussion: In case of the total revenue from the sale of DVD players’ rises, in spite of the price of the DVD declining by 20%, it shows that the price elasticity related to the DVD is high. A fall in the price of the DVD’s has led to an increase in the sales of the DVD players. The price reduction does not necessarily lead to an increase in profits for DVD players’ manufacturers. This purely depends on the reduction in margin compared to the increase in sales.
Question 1: What do you think would happen to sale and price of DVDs after this?”