Multiple Choice
Which of the following statements is TRUE?
I. Movies in a theater and movies at home could be substitute goods if the falling price of home entertainment equipment causes people to watch more movies at home and fewer in the theater.
II. Movies in a theater and movies at home could be complement goods if watching a lot of movies at home causes people to become more interested in movies, increasing their demand for movies in a theater.
III. If the cross-price elasticity of demand between movies in a theater and movies at home is 0.33, the two goods are complements.
A) I only
B) II only
C) I, II, and III
D) I and II
Correct Answer:
Verified
Correct Answer:
Verified
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