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dybincka [34]
4 years ago
6

SCENARIO 3.1: Rented DVDs and movies shown in theaters are substitutes. Rented DVDs and plasma TVs are complements. Plasma TVs a

nd 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. Most plasma TVs sold in the United States are imported from Japan. If the United States government reduces the number of plasma TVs that can be imported into the United States, ceteris paribus, what would happen?
Business
1 answer:
EleoNora [17]4 years ago
4 0

Answer:

What would happen is Price of TVs goes up and price of rental DVDs goes down. Subsequently, price of movies theaters rises.

Explanation:

As there are less import of Plasma TV from Japan, the supply will be lower, while demand remains unchanged. So, price of Plasma TV will go up following is the demand for plasma TV will go down

As Plasma TV and rental DVDs are complementary goods, downward in demand for plasma TV means less demand for rental DVDs while supplies for rental DVD remains the same. Thus, price of rental DVD will go down.

As rental DVD and movies theaters are substitute goods, the demand in rental DVD going down will cause the increase in the demand in movie theaters while supplies for movie theaters stay the same. So, movie theater ticket will go up subsequently.

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Equilibrium price will increase and quantity will decrease will be the resulting change in the equilibrium of the chocolate bar market.

The equilibrium charge is the rate at which the amount demanded equals the amount supplied. It's far decided through the intersection of the demand and deliver curves. A surplus exists if the amount of an excellent or carrier provided exceeds the amount demanded on the contemporary charge; it causes downward strain on the charge.

Equilibrium is the nation wherein market supply calls for balance every other, and as a result, costs come to be strong. Typically, an over-supply of goods or services causes expenses to move down, which results in a higher call for—while an underneath-deliver or shortage causes fees to head up resulting in less demand.

Upward shifts inside the supply and demand curves have an effect on the equilibrium rate and amount. If the deliver curve shifts upward, meaning deliver decreases however demand holds constant, the equilibrium rate will increase but the quantity falls.

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IRR has some problems however and one of them is reflected here. There can sometimes be two IRRs and when this happens, using IRR as a viability measure cannot be done because a single rate is needed for comparison with the required return.

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