Economics (MindTap Course List)
Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
Question
Chapter 3, Problem 21QP
To determine

Acceptability of the statement.

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  • In 2009, Netflix raised its prices by 10% and the number of Netflix customers fell by nearly 20% (assuming everything else was held constant) In 2019, Netflix raised its prices by 10% and the number of Netflix customers fell by only 2% (assuming everything else was held constant) 1)  The price increase was the same, but Netflix lost much less customers on a percentage basis in 2019 versus 2009.  Using supply and demand concepts, what could explain the difference in the decrease in number of customers on a percentage basis that Netflix lost in 2019 vs. 2009?  Explain why. 2) Did Netflix come out better with the 2009 price increase or the 2019 price increase?  Using concepts that you have learned about supply and demand, explain why Netflix's revenues and profits increased or decreased in 2009 and in 2019 due to the 10% price increase.
    “The laws of supply and demand indicate that higher prices are ineffective in reducing smoking. In particular, higher cigarette prices will reduce the demand for cigarettes. This reduction in demand will push the equilibrium price back down to its original level. Since the equilibrium price will remain unchanged, smokers will consume the same number of cigarettes.” Do you agree or disagree with this view?
    Complete the following table by indicating whether an event will cause a movement along the demand curve for chicken wings or a shift of the demand curve for chicken wings, holding all else constant. Event Movement Along Shift An increase in the number of consumers       A decrease in the price of chicken wings       An increase in income of consumers
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