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...

Extracted 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 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? Will consumer surplus increase or decrease? a. |11. 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. 1. 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?