Question

Question 3. Netflix to Offer Online Movie Viewing Online movie rental service Netflix introduced a new feature Tuesday to allow customers to watch movies and television series on their personal computers. ... Netflix has been competing with video rental retailer Blockbuster, which has added an online rental service to the in-store rental service. CNN, January 16 2007 a. How will the offering of online movie viewing influence the price elasticity of demand for in-store movie rentals? (1 point) The price elasticity of demand for store rental movies will increase because online movie viewing is another substitute for renting movies. b. Would the cross elasticity of demand for online movies and in-store movie rentals be negative or positive? Explain. (1 point) Online movies and in-store rental movies are substitutes, so their cross elasticity of demand is positive. c. Would the cross elasticity of demand for online movies with respect to high-speed internet service be negative or positive? Explain. (1 point) Online movies and high-speed Internet service are complements, so their cross elasticity of demand is negative.