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. In response to complaints from movie theater owners, the government removes an entertainment tax on movie tickets, but there are no additional taxes levied on rented DVDs. This would lead to

Question

Quizplus · Accepted Answer

The removal of the entertainment tax on movie tickets would decrease the price of movie tickets, making them more attractive to consumers. As movies shown in theaters and plasma TVs are normal goods, this would likely increase demand for plasma TVs as well, increasing their price. However, rented DVDs and plasma TVs are complements, so the increase in the price of plasma TVs would lead to a decrease in demand for rented DVDs, causing their rental price to decrease. Therefore, the removal of the entertainment tax would lead to a decrease in the price of movie tickets and the rental price of DVDs.