Question

Name: Student ID 1) Draw the supply curve and demand curve to illustrate the market for Netflix subscriptions for each of the following parts a, b, and e. Label the supply curve S, and the demand curve D. Mark the initial equilibrium point , with an initial equilibrium price of Pand equilibrium quantity of Qi. a) Illustrate the effect of Netflix signing an exclusivity deal to stream popular anime. If the demand curve shifts, label the new demand curve D. If the supply curve shifts, label the new demand curve S. Label the new equilibrium point Es, with the new equilibrium price of P, and cquilibrium quantity of O Did the equilibrium price increase or decrease? Did the equilibrium quantity increase or decrease? b) Illustrate the effect of a decrease in the licensing fees that Netflix pays to stream movies on their site. If the demand curve shifts, label the new demand curve Ds. If the supply curve shifts, label the new demand curve Sz. Label the new equilibrium point Es, with the new equilibrium price of Ps and equilibrium quantity of O. Label the new equilibrium point E2, with the new equilibrium price of P and equilibrium quantity of O Did the equilibrium price increase or decreasc? Did the equilibrium quantity increase or c) Illustrate the elect of a decrease in the price of a Hulu subscription in the market for Netflix subscriptions. If the demand curve shifts, label the new demand curve D. If the supply curve shills, label the new demand curve S, Label the new equilibrium point with the new equilibrium price of Ps and equilibrium quantity of Label the new yuilibrium point with the new equilibrium price of Pandoquilibrium quantity of Did the equilibrium price increase or decrease? Did the equilibrium quantity increase or decrease d) Consider if the events in both part band happened simultaneously. What can you say will happen for certain about the new equilibrium price or the new equilibriun quantity That is, does the equilibrium price increase, decrease, or is it ambiguous? And, does the equilibrium quantity increase, decrease, or is it ambiguous?

Answer 1

	SHIFT	QUANTITY	PRICE
(a)	Demand shifts to the right because of increase demand due to exclusive streaming of a popular anime	The quantity the new equilibrium increases.	The price increases in the new equilibrium
(b)	The Supply curve shifts to the right and down.	The quantity increases	The price decreases
(c)	The demand curve shifts to the left because of reduction in HULU subscription which is a substitute to Netflix	Quantity decreases	Price increases
(d)	The demand curve shifts to the left and the supply curve shifts to the right	Quantity my decrease if the shift in demand is greater than that in Supply while the Quantity may increase if the shift in supply is greater than that of demand curve.	Price decreases.

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