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1. Have you "pulled the plug?" With Netflix, Amazon Prime, CBS All access, people are leaving cable in large numbers. Netflix et al are substitutes for cable TV,
and with a lower
priced substitute we should see prices falling. In addition, Netflix is increased competition, and more competition shifts the supply curve
rightward,
which should also cause a drop in prices.
And yet, cable prices aren't falling. Why not? Is supply and demand really failing? Discuss.
2. Identify a good that you have purchased recently in which you believe that you received a large consumer surplus. Explain, using the economic definition of
consumer surplus in your answer.

Sagot :

GinnyAnsweridn

Final answer:

Cable prices may not fall due to bundling, market power, and infrastructure costs. Consumer surplus happens when the price paid is below what a consumer values a good.


Explanation:

The reason cable prices aren't falling despite the rise of streaming services like Netflix could be due to various factors:

  1. Complexity of bundling: Cable companies often bundle various services together, making it harder to directly compare prices to standalone streaming services.
  2. Market power: Cable companies may have market power in certain areas, allowing them to maintain higher prices.
  3. Investments and infrastructure costs: Cable companies have invested heavily in infrastructure which may keep prices stable.

Consumers receiving a large consumer surplus occurs when the price they pay for a good is lower than the highest price they are willing to pay. For example, buying a discounted airline ticket can lead to a consumer surplus when the price is lower than what the consumer values the flight at.


Learn more about Consumer behavior and pricing in the cable and streaming industry here:

https://brainly.com/question/14919946


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