Class_12_worksheet

Class_12_worksheet - Economics 101 P. Conway, Fall 2011...

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Economics 101 P. Conway, Fall 2011 In-class worksheet, Class 12 1. Market power measures a firm’s ability to increase the price of its good or service without losing all of its sales. Netflix is a firm that provides movies to its customers through two media: digital streaming and hard-copy mailing. Recently it decided to separate these two, and to charge for them separately. When the fees charged before are compared to the fees charged after, it is evident that Netflix has raised the price of its service to its customers. If Netflix has market power in its “industry”, what should we expect to see happen to its customer base and the number of movies it rents? It should not disappear completely. It will likely decline. How much it declines is evidence of where it stands on the competition continuum. 2. The marginal revenue of a firm is a measure of the change in total revenue that results from a one-unit change in the firm’s output/production . George has a very specialized product:
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This note was uploaded on 02/13/2012 for the course ECON 101 taught by Professor Balaban during the Fall '07 term at UNC.

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Class_12_worksheet - Economics 101 P. Conway, Fall 2011...

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