PRIN OF MICROECONOMICS
2nd Edition
ISBN: 9780393914085
Author: coppock
Publisher: Norton, W. W. & Company, Inc.
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Chapter 11, Problem 6SP
To determine
The reason why students and not other groups of customers offered discounted tickets.
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Vivian conducted market research on her company’s products. She found that after the company raised the price of its product by $1.50, the demand in the uptown region remained the same with only minor fluctuations. However, she found that the demand in the downtown region dropped by 20 percent after the price change. How should Vivian take these demands into consideration?
In a situation where demand differs in different areas, Vivian should consider the
demand.
Does paperless ticketing benefit consumers more than traditional ticketing that allows tickets to be resold? Explain.
Read the Netflix Pricing Case and answer the questions below.
First, calculate the percentage increase in the relevant price from the end of Q1, 2016 to the end of Q3, 2016.
Second, assume that Netfix had decided to postpone their price increase in May 2016 for a year. Calculate what it is expected to have happened to their Membership/Quantity numbers from the end of Q1, 2016 to the end of Q3, 2016. These will be their "expected" quantities without the price increase.
Third, Calculate the percentage change in quantity with and without the price change
Fourth, calculate Netflix's Price Elasticity of demand using the period from the end of Q1, 2016 to the end of Q3, 2016, using your previous calculations.
Fifth, discuss how confident you are about your calculation and how it could be improved.
Sixth, what is the expected effect of the price increase upon Netflix's Revenue; why?
Seventh, what is the expected effect upon profits; why?.
Seventh, can you explain the reaction of…
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