Many movie consumers who used to rent DVDS are now patronising online video rentals, especially, streaming services. What impact did the advent of online video rentals and streaming have on the in-store movie industry? Use the demand and supp diagram to illustrate your answer. Pay attention to how the equilibrium quantity and price adjust. Make state all your assumptions. (1 a. b. Which would be more price elastic, the demand for Netflix online streaming or the demand for online movie rentals in general? Explain. C. Would the cross-price elasticity of demand for online movie rentals and in-store movie rentals be positive or negative? What does your answer imply for the equilibrium price and quantity of online movie rentals? Use the demand and supply diagram to illustrate your answer. d. Because of COVID-19 most people are staying indoors, yet they cannot afford online streaming movies, like Netflix. Should the government regulate the price of online streaming? In your answer, critically discuss the pros and cons of price regulation.

Many movie consumers who used to rent DVDS are now patronising online video rentals, especially, streaming services. What impact did the advent of online video rentals and streaming have on the in-store movie industry? Use the demand and supp diagram to illustrate your answer. Pay attention to how the equilibrium quantity and price adjust. Make state all your assumptions. (1 a. b. Which would be more price elastic, the demand for Netflix online streaming or the demand for online movie rentals in general? Explain. C. Would the cross-price elasticity of demand for online movie rentals and in-store movie rentals be positive or negative? What does your answer imply for the equilibrium price and quantity of online movie rentals? Use the demand and supply diagram to illustrate your answer. d. Because of COVID-19 most people are staying indoors, yet they cannot afford online streaming movies, like Netflix. Should the government regulate the price of online streaming? In your answer, critically discuss the pros and cons of price regulation.

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 1.1P: (Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of...

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(Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of Si per unit. A reduction in price to $0.20 results in an increase in quantity demanded to 70 units. Using the midpoint formula, show that these data yield a price elasticity of 0.25. By what percentage would a 10 percent rise in the price reduce the quantity demanded, assuming price elasticity remains constant along the demand curve?
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Plot the price and quantity data given in the demand schedule of exercise 1. Put price on the vertical axis and quantity on the horizontal axis. Indicate the price elasticity value at each quantity demanded. Explain why the elasticity value gets smaller as you move down the demand curve.
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