Economics Homework Help. ECON 101 SBCC Netflix Price? Elasticity of Demand Questionnaire
I need support with this Economics question so I can learn better.
A.Read the following article from Yahoo Finance titled, “Most Netflix Users Would Pay a Lot More for Their Subscription, Survey Shows (Links to an external site.)”. Answer the following questions.
Questions
1.Based on this survey, suppose Netflix decided to double the price of its service from $8 to $16. As a result, the number of Netflix subscribers falls from 60 million to 40 million. Use the midpoint formula to calculate the price elasticity of demand for Netflix. Type in both the formula (with the numbers used) and your answer in your response.
2.Based on your calculation; is Netflix elastic, inelastic, or unit elastic? Explain your answer.
3.Would Netflix generate more revenue if they made this price change? Explain your answer.
B. Listen to this Planet Money podcast: The Moonshine Stimulus (Links to an external site.)
Summary: As part of a quest to prove whether President Roosevelt drank Moonshine at the White House, the Planet Money team discusses the history and economics of prohibition.
Original Air Date: August 3, 2010
Length 18:05 Main story content begins: 1:31
- Using what you know about elasticity and what you learned from this podcast, what would be your ‘economic expert’ opinion on imposing a tax specifically on the purchase of marijuana (similar to a tax specifically on alcohol) in the states where marijuana sales are legal? Connect your economic opinion to details from the podcast. If you use outside information, provide links to your sources.
- A question to expand your application of elasticity ideas: Now that marijuana is legalized (and taxed) in California, what other markets do you think have been or will be impacted (related goods)? How might legalization impact what goods consumers consider to be substitutes for marijuana? Do you think any have changed? Why?
