Refer to Scenario 3.1 below to answer the questions that follow.
SCENARIO 3.1: Rented DVDs and movies shown in theaters are substitutes. Rented DVDs and plasma TVs are complements. Plasma TVs and movies shown in theaters are normal goods. People watch rented DVDs more often in the winter than in the summer.
-Refer to Scenario 3.1. The number of stores renting DVDs is reduced by 25%, reducing the number of DVDs available. Which of the following would occur?

Question

Quizplus · Accepted Answer

A reduction in the number of DVD rental stores decreases the supply of DVDs, leading to an increase in their rental price. As DVDs and theater movies are substitutes, the increased price of DVDs would also increase the demand for movie tickets, raising their price. Since plasma TVs are complements to DVDs, the higher price of DVDs could reduce the demand for plasma TVs, potentially decreasing their price.