A. Netflix has raised prices by $1-2 (depending on the type of plan). After price increases,...

A. Netflix has raised prices by $1-2 (depending on the type of plan). After price increases, Netflix gained 8.3 million new subscribers. Does this imply that Demand Curve is upward sloping for Netflix? Explain. Your explanation should include a description of the Theory of Demand and be supported with a properly labeled graph.

Does Netflix’s ability to raise prices and gain more customers imply they are able to price gouge? Explain. Would your answer change if Netflix was a necessity or was something that people needed in an emergency? Explain.

B.

The debate on Minimum Wage has intensified over the last several years. Articles such as the one referenced here, are used as support that a higher pay rate is plausible. Why might Target benefit from paying its workers $11 an hour? Support your answer with a fully labeled Supply and Demand curve for Target Labor. What are the other outcomes of the self-imposed Target pay rate?

Is this evidence that other retailers should also pay $11 an hour? Assuming that competitor’s are not willing to pay the $11 an hour wage rate, show the outcome of a $11 an hour Minimum Wage. Explain the differences in each graph. What are the likely reasons that these differences exist? Explain.

Expert Solution

Rahul Sunny answered 2 years ago

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