Consider the market for Netflix Subscriptions. Show graphically and explain using economic intuition, what happens to the market price and quantity in each of the following: a) A popular show “Suits” gets taken out of the platform. b) The price of Hulu subscriptions doubles. c) After the effects of a) and b), you see that the price of Netflix subscriptions increases. d) After the effects of a), what will happen if Netflix doesn’t lower their prices.
1. Consider the market for Netflix Subscriptions. Show graphically and explain using economic intuition, what happens to the market
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a) A popular show “Suits” gets taken out of the platform.
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b) The price of Hulu subscriptions doubles.
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c) After the effects of a) and b), you see that the price of Netflix subscriptions increases.
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d) After the effects of a), what will happen if Netflix doesn’t lower their prices.
For each of the following situations, decide whether Shane has diminishing
a) The more economics classes Shane takes, the more he enjoys the subject. And the more classes he takes, the easier each one gets, making him enjoy each additional class even more than the one before.
b) Shane likes loud music. In fact, according to him, “the louder, the better.” Each time he turns the volume up a notch, he adds 10 utils to his total utility.
c) Shane enjoys watching the show “Stranger Things”. He claims that these episodes are always exciting, but he does admit that the more times he sees an episode, the less exciting it gets.
d) Shane loves sour patch kids. The more he eats, however, the fuller he gets and the less he enjoys each additional unit. And there is a point at which he becomes satiated: beyond that point, more marshmallows actually make him feel worse rather than better.
Market Equilibrium Price is the price at which the quantity demanded by consumers equals the quantity supplied by producers.
Market Equilibrium Quantity is the quantity that is produced and consumed at the equilibrium price. It represents a balance between supply and demand.
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