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. Instructions: Round your response to one decimal place. If the quantity demanded decreases by 1.4 million for every $1 increase in the subscription price, a. How many initial subscribers would Disney+ have gotten at a price of $5.99?
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. Instructions: Round your response to one decimal place. If the quantity demanded decreases by 1.4 million for every $1 increase in the subscription price, a. How many initial subscribers would Disney+ have gotten at a price of $5.99?
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter14: Indirect Price Discrimination
Section: Chapter Questions
Problem 7MC
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Answer:
Given,
Initially, Disney+ has 10 million subscribers at the price of $6.99 a month.
It is also given that if the price rises by $1 then the quantity demanded falls by 1.4 million. It also means that when the price changes by $1 the quantity demanded changes by 1.4 million.
The answer of part a = 11.4 million
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