Roaring Lion Studios can produce DVDs at a constant marginal cost of $

Roaring Lion Studios can produce DVDs at a constant marginal cost of $5 per disk, and the studio has just releasing the DVD for its latest hit film, Ernest Goes to the Hamptons.

The retail price of the DVD is $25, and the elasticity of demand for this film is -2. Has the studio selected the profit-maximizing retail price for this DVD? A) Yes
B) No, the retail price is too low
C) No, the retail price is too high
D) We do not have enough information to answer this question.

ANSWER

C