This teacher-selected article with suggested questions is part of the Financial Times Free Entry to Schools program. Details/registration here.
Specification:
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Market structures, prices and spending points, profit, income elasticity, regulation, contestable markets
Click to read the article below, then answer the questions:
Will the ‘subscription economy’ feel the Netflix effect?
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Using the model of a company in imperfect competition, show the impact of falling demand for subscription services. Comment on how this affects price performance and profit (pop)
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Explain whether subscription services are income-elastic or income-inelastic
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The new regulation will further increase costs for companies in the subscription economy. Assess the impact on consumers and businesses
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Netflix is one of several companies that sell video content. Discuss how the declining number of subscribers affects competitiveness in this market
John Greenwood, Bromley High School for Girls
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