Show necessary and appropriate steps. No credits will be given to answers without showing necessary calculations and/or explanations. 1. Consider the markets for DVD movies, TV screens, and tickets at movie theaters. a. For each pair, identify whether they are complements or substitutes: DVDs and TV screens DVDs and movie tickets TV screens and movie tickets b. Suppose a technological advance reduces the cost of manufacturing TV screens. Draw a diagram and explain what happens in the market for TV screens.
Show necessary and appropriate steps. No credits will be given to answers without showing necessary calculations and/or explanations. 1. Consider the markets for DVD movies, TV screens, and tickets at movie theaters. a. For each pair, identify whether they are complements or substitutes: DVDs and TV screens DVDs and movie tickets TV screens and movie tickets b. Suppose a technological advance reduces the cost of manufacturing TV screens. Draw a diagram and explain what happens in the market for TV screens.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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**Exercise on Market Analysis and Complementary Goods**
Show necessary and appropriate steps. No credits will be given to answers without showing necessary calculations and/or explanations.
1. **Consider the markets for DVD movies, TV screens, and tickets at movie theaters.**
a. For each pair, identify whether they are complements or substitutes:
- DVDs and TV screens
- DVDs and movie tickets
- TV screens and movie tickets
b. Suppose a technological advance reduces the cost of manufacturing TV screens. Draw a diagram and explain what happens in the market for TV screens.
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**Instructions for Diagrams:**
- To illustrate what happens when the manufacturing cost of TV screens decreases, draw a supply and demand graph.
- Label the axes with the price and quantity of TV screens.
- Show the initial supply curve and a new supply curve that represents the reduced cost.
- Explain how the shift in the supply curve affects equilibrium price and quantity.
This exercise encourages analyzing the relationships between different goods, understanding market dynamics, and illustrating economic concepts with diagrams.
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