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1. Disney+ is a streaming service that distributes films and television series produced by the Walt Disney Studios - Edexcel - A-Level Economics A - Question 1 - 2022 - Paper 1
Question 1
1. Disney+ is a streaming service that distributes films and television series produced by the Walt Disney Studios.  ... show full transcript
Worked Solution & Example Answer:1. Disney+ is a streaming service that distributes films and television series produced by the Walt Disney Studios - Edexcel - A-Level Economics A - Question 1 - 2022 - Paper 1
Step 1
Ceteris paribus, the most likely consequence of the above data is that Disney+ will experience an increase in its:
Answer
The correct answer here is D. revenue. This is because the data shows a significant increase in the number of subscribers over time, indicating that as the subscriber base grows, revenue is expected to rise as well. The other options do not directly relate to the increase in subscribers under ceteris paribus conditions.
Step 2
Draw a supply and demand diagram to show the likely effect of the change in the number of subscribers on the market equilibrium for Disney+ services.
Answer
To illustrate the change in market equilibrium:
- Label the original demand (D1) and supply (S) curves.
- Indicate that the demand curve shifts to the right (to D2) due to the increase in subscribers.
- Identify the original equilibrium point (E1) where D1 and S intersect, and the new equilibrium point (E2) where D2 intersects S.
- Annotate the price increase (P1 to P2) and output increase (Q1 to Q2) resulting from the shift.
The diagram should clearly show the demand curve moving to the right and the corresponding changes in price and quantity.