Refer to Scenario 3

question 141

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.
-Related to the Economics in Practice on page 50: The Amazon Kindle and the electronic textbooks available for the Kindle are complementary goods. Electronic textbooks and traditional, hard-copy textbooks are substitute products. If the price of electronic textbooks for the Kindle decreases,

• A) demand for the Kindle increases, demand for electronic textbooks increases, and demand for traditional, hard-copy textbooks decreases.
• B) the quantity of Kindles demanded increases, demand for electronic textbooks increases, and the quantity of traditional, hard-copy textbooks demanded decreases.
• C) demand for the Kindle decreases, the quantity of electronic textbooks demanded increases, and demand for traditional, hard-copy textbooks decreases.
• D) demand for the Kindle increases, the quantity of electronic textbooks demanded increases, and demand for traditional, hard-copy textbooks decreases.

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Definitions:

Fire Insurance Policy

A contract between an individual or entity and an insurance company, offering protection against losses or damage from fire in exchange for premium payments.

Insured

An individual or entity covered by an insurance policy, receiving protection against specified risks.

Insurance Contract

A legally binding agreement between an insurance company and the policyholder, detailing the terms under which the insurer agrees to compensate the insured for specific losses.

Written Policy

A formal statement or document that outlines specific guidelines or regulations within an organization, setting expectations for behavior or operations.