On Amazon.com, there are three versions of Keynes’ famous General Theory: a hard

Question

On Amazon.com, there are three versions of Keynes’ famous General Theory: a
hardcover for $19.79, paperback for $8.82, and a Kindle version for $2.99. There
is not much difference in the cost of production between hardcover and
paperback books (though there likely is for the Kindle e­book version), but
hardcover books do tend to be published earlier than paperback versions of the
same book. How do you explain the wide variety of prices for basically the same
book?
Select one:
a. Even though the cost of production between hardcover and paperback is small,
demand is highly elastic, so this small cost difference results in a large price
difference. The cost difference between paperback and e­books is larger,
resulting in the smaller gap between paperback and e­book prices.
b. The market for hardcover books has more demand and less supply than the
market for paperbacks, which likewise has more demand and less supply than the
market for e­books. The equilibrium prices all reflect these differences.
c. Price discrimination between demanders. Kindle owners are high demanders
since the format is not compatible with anything but Kindles. Hardcover buyers
are low demanders since there aren't many who would want a hardcover when
paperbacks or e­books are cheaper. There are more paperback buyers, so they
pay a price between these two extremes.
d. Price discrimination between demanders. High demanders are willing to pay a
high price for a hardcover that is published early. Low demanders aren't, and are
only willing to pay low price for later paperback. It is much cheaper to produce the
Kindle version (MC probably close to zero), and not many buyers (people with
Kindles, less D) lead to lowest price

Explanation / Answer

d. Price discrimination between demanders. High demanders are willing to pay a
high price for a hardcover that is published early. Low demanders aren't, and are
only willing to pay low price for later paperback. It is much cheaper to produce the
Kindle version (MC probably close to zero), and not many buyers (people with
Kindles, less D) lead to lowest price

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