Music Pricing Downloads of digital entertainment goods, e.g., movies, songs, books, have marginal costs that are essentially zero. If so, what elasticity are the sellers adjusting prices to achieve?
(P-MC)/P = 1/|e|, but if MC = 0, we have:
(P-0)/P = 1/|e|
P/P = 1/|e|
1 = 1/|e|
e = -1
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