Movie tickets and DVD rentals are services. (LO4) a) inferior b) complementary c) substitute d) highly inelastic

Let's first understand the meaning of each of these terms: a) Inferior: An inferior good is a good whose demand decreases when consumers' income increases. b) Complementary: Complementary goods are goods that are typically consumed together, and an increase in the demand for one leads to an increase in the demand for the other. c) Substitute: Substitute goods are goods that can be used in place of each other. A change in price or demand for one of these goods affects the demand for the other. d) Highly inelastic: An inelastic good is a good whose demand is not significantly affected by changes in price. For a good to be highly inelastic, it must have an inelastic demand with a very low price elasticity of demand coefficient.

Now, let's analyze the relationship between movie tickets and DVD rentals using these definitions: a) Inferior: Movie tickets and DVD rentals are not inferior goods, as their demand does not necessarily decrease when consumers' incomes increase. b) Complementary: Movie tickets and DVD rentals are not complementary goods, as they are not typically consumed together, and an increase in demand for one does not lead to an increase in demand for the other. c) Substitute: Movie tickets and DVD rentals can be considered substitute goods, as they both offer entertainment services, and consumers may choose one over the other based on price or personal preference. d) Highly inelastic: Movie tickets and DVD rentals may have some degree of inelastic demand, as some consumers might be more loyal to one option over the other, but they would not be considered highly inelastic goods. Therefore, based on our analysis, movie tickets and DVD rentals are:

c) substitute