Blu-ray stomped HD DVD to become the standard format for high-definition movie discs, but when will it can claim victory over the good old DVD? Buyers of $2,000, 40-inch TVs are the ones that will lead the charge. Everyone else will follow when the price falls. Blu-ray machine prices are now starting to drop and Wal-Mart Stores Inc. began stocking a $298 Magnavox model. That’s cheaper than most alternatives, but a hefty price hike from a typical $50 DVD player.
a. What does marginal utility theory predict about the marginal utility from a Magnavox Blu-ray machine compared to the marginal utility from a typical DVD player?
b. What will have to happen to the marginal utility from a Blu-ray machine before it is able to “claim victory over the old DVD”?