Refer to Scenario 3

question 36

Multiple Choice

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. You observe that the rental price for DVDs is higher in the winter than in the summer. This would be explained by the fact that

• A) demand for rented DVDs is higher in the winter than in the summer.
• B) the quantity demanded of rented DVDs is higher in the winter than in the summer.
• C) there are more DVDs released into the rental market in the winter than in the summer.
• D) consumer income tends to fall in the winter and increase in the summer.

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Definitions:

Costs

Expenses incurred in the production of goods or in the provision of services, including labor, materials, and overheads.

Benefits

The advantages or positive outcomes gained from actions or decisions, often considered in economic, social, or health contexts.

Incentive

A reward or benefit that motivates or encourages a specific action or behavior.

Tradable Pollution Permits

A market-based approach to controlling pollution by allocating permits that allow the holder to emit a certain amount of pollution, which can be traded among companies.