Tony: A new kind of videocassette has just been developed  It lasts for only half as many viewings as the old kind does but costs a third as much  Ttherefore, video rental stores would find it significantly more economical to purchase and stock movies recorded on the new kind of videocassette than on the old kind  Anna: But the videocassette itself only accounts for 5 percent of the price a video rental store pays to buy a copy of a movie on video; most of the price consists of royalties the store pays to the studio that produced the movie
So the price that video rental stores pay per copy would decrease by considerably less than 5 percent, and royalties would have to be paid on additional copies
Video rental stores should always stock the highest-quality videocassettes available, because durability is more important than price.