3. Hollywood writers negotiate a new agreement with movie producers that they will receive 20 percent of the revenue from every DVD rental of a movie they worked on. They have no such agreement for movies shown on pay-per-view TV a. After the new writers' agreement, show what will happen in the market for DVD rentals, answering the 3 points below. i. Illustrate with a diagram. Label old CS as well as new CS. ii. Will supply or demand shift? Which way? iii. Will consumer surplus increase or decrease?
3. Hollywood writers negotiate a new agreement with movie producers that they will receive 20 percent of the revenue from every DVD rental of a movie they worked on. They have no such agreement for movies shown on pay-per-view TV a. After the new writers' agreement, show what will happen in the market for DVD rentals, answering the 3 points below. i. Illustrate with a diagram. Label old CS as well as new CS. ii. Will supply or demand shift? Which way? iii. Will consumer surplus increase or decrease?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![3. Hollywood writers negotiate a new agreement with movie producers that they will receive 20
percent of the revenue from every DVD rental of a movie they worked on. They have no such
agreement for movies shown on pay-per-view TV
a. After the new writers' agreement, show what will happen in the market for DVD rentals,
answering the 3 points below.
i. Illustrate with a diagram. Label old CS as well as new CS.
ii. Will supply or demand shift? Which way?
iii. Will consumer surplus increase or decrease?
b. Consumers consider DVD rentals and pay-per-view movies as substitutes. When the
new writers' agreement comes into effect, show what will happen in the market for pay-
per-view movies, answering the 3 points below.
i. Illustrate with a diagram. Label old CS as well as new CS.
ii. Will supply or demand shift? Which way?
iii. Will consumer surplus increase or decrease?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb8eaeb6c-bcc8-4b2a-b2a6-9ab84e3ccd97%2F73ff76b0-0d56-4a90-8799-59b15f2b8cf3%2Fbcijxwp_processed.png&w=3840&q=75)
Transcribed Image Text:3. Hollywood writers negotiate a new agreement with movie producers that they will receive 20
percent of the revenue from every DVD rental of a movie they worked on. They have no such
agreement for movies shown on pay-per-view TV
a. After the new writers' agreement, show what will happen in the market for DVD rentals,
answering the 3 points below.
i. Illustrate with a diagram. Label old CS as well as new CS.
ii. Will supply or demand shift? Which way?
iii. Will consumer surplus increase or decrease?
b. Consumers consider DVD rentals and pay-per-view movies as substitutes. When the
new writers' agreement comes into effect, show what will happen in the market for pay-
per-view movies, answering the 3 points below.
i. Illustrate with a diagram. Label old CS as well as new CS.
ii. Will supply or demand shift? Which way?
iii. Will consumer surplus increase or decrease?
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