Tony: A new kind of videocassette has just been developed.
Tony's Conclusion
Video rental stores would find it way more economical to use the new kind of videocassette.
Tony's Evidence
The new one only lasts for half as many viewings, but it costs 1/3 as much.
Anna's Response
Yes but the videocassette itself is only 5% of the store's cost per copy. 95% of the price is royalties paid to the studio that produced the movie. And you'd have to pay royalties on each new copy.
Evaluate
Anna's implied conclusion seems to be the opposite of Tony's explicit conclusion. He thought that stores would save money by using the new type of cassette. They wear out faster (1/2 as long), but they cost less (1/3 the cost).
Maybe the old style lasts 6 months, whereas these new ones only last 3 months. But the old ones cost $9 and these cost $3.
You could spent $9 for one old style tape that would last 6 months. Or you could spend $3 on a new tape. It would only last 3 months, so then you'd need to buy another to get to the same 6 month mark, but you would have spent $6 vs. $9.
Anna is pointing out that you'd end up spending more on the new tapes, because you have to pay a royalty fee on every copy. Let's pretend the royalty fee is $20 (it's actually way more / it's 19 times the cost of the tape, because 95% vs. 5% is a 19:1 ratio).
6 months using Old tape: $9 for one tape + $20 royalty = $29
6 months using New tapes: $6 for two tapes + $20 royalty = $46 ($3 each) (for each tape)
Goal
Let's look for something like, .