Illustrate using a supply and demand graph what happened to Netflix resulting from new competition, and then identify the effect onequilibrium price and quantity.FRONT PAGEPricing Disney+Disney decided it wanted to provide streaming services directly to customers, rather thanrenting its library of films and television shows to other streaming services like Netflix. Buthow successful would a streaming service be? In other words, what did the demand for a"Disney+" streaming service look like? Disney knew that the number of subscribers woulddepend not just on the attractiveness of the Disney archives, but also on the subscriptionprice. After doing some market research, Disney decided to launch Disney+ at a price of$6.99 a month (or $69.99 per year). When Disney+ was launched on November 12, 2019,10 million people signed up on the first day-a resounding success!Source: News reports, October-December 2019. SupplyDemandQuantity (number of subscribers)Price ($ per subscription)

Answered: Illustrate using a supply and demand…

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: Monopolistic Competition

Section: Chapter Questions

Problem 8PA

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Illustrate using a supply and demand graph what happened to Netflix resulting from new competition, and then identify the effect on
equilibrium price and quantity.
FRONT PAGE
Pricing Disney+
Disney decided it wanted to provide streaming services directly to customers, rather than
renting its library of films and television shows to other streaming services like Netflix. But
how successful would a streaming service be? In other words, what did the demand for a
"Disney+" streaming service look like? Disney knew that the number of subscribers would
depend not just on the attractiveness of the Disney archives, but also on the subscription
price. After doing some market research, Disney decided to launch Disney+ at a price of
$6.99 a month (or $69.99 per year). When Disney+ was launched on November 12, 2019,
10 million people signed up on the first day-a resounding success!
Source: News reports, October-December 2019.

Supply
Demand
Quantity (number of subscribers)
Price ($ per subscription)

Expert Solution

Step 1

The demand and supply play an important role in determining the equilibrium price and quantity of a good. The equilibrium occurs when the quantity demanded of the good is equal to the quantity supplied of the good.

The changes in demand or supply can change the equilbrium price and quantity. For example, a decrease in the demand will reduce the equilibrium price and equilibrium quantity of a good sold in the market.

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