Show necessary steps and reasoning that lead to the answers. No credits will be given to answers without such steps and reasoning. Label diagrams clearly. Write legibly.

[Note: If you cannot draw graphs using a computer, then you can hand draw your graphs, take a picture and upload the picture to Blackboard. Please time yourself accordingly as this process may take some time. The system is likely to take only ONE file. Therefore, if you'd want to uploaded more than one part of the answers, please have all of them in ONE file.]

1. Using a Supply-Demand diagram, explain how each of the following events will affect the market of DVD rentals. Describe the change in the equilibrium price and quantity.
2. (10 points) Online streaming technology allows people to watch TV programs and movies more comfortably online.

1. (10 points) The cost of making DVDs has gone down due to cheaper discs.