QUESTION 24 3.45 points Rented DVDs and movies shown in theaters are normal good

Question

QUESTION 24 3.45 points Rented DVDs and movies shown in theaters are normal goods. Most plasma TVs sold in the United States are imported from Japan. If the United States government reduces shown in theaters are substitutes. Rented DVDs and plasma TVs are complements. Plasma TVs and movies TVs that can be imported into the United States, ceteris paribus, what a. The price of plasma TVs b. The price of plasma TVs would C The price of plasma TVs d The price of and the rental price of DVDs would increase crease and the rental price of DVDs would decrease would decrease and the rental price of DVDs would plasma TVs and the rental price of DVDs decrease. Would

Explanation / Answer

Answer is b. The price of plasma TV will increase and rental of DVD would decrease.

Explanation:

When the number of plasma TV that can be imported is restricted, then the supply of TV will reduce and there is a leftward shift of supply curve, resulting in an increase in Plasma TV and decrease in quantity of Plasma TV

When the quantity of Plasma TV decreases, the demand for DVD to be rented out also decreases, resulting in leftward shift in demand curve. This will result in decrease in price of DVD rentals.

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