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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
Disney+ is a streaming service that distributes films and television series produced by the Walt Disney Studios. Disney+ subscribers (million) November 2019 ... show full transcript
Worked Solution & Example Answer: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:
Answer
The correct answer is D: revenue.
Given the significant increase in subscribers from 10 million in November 2019 to 50 million by April 2020, it is evident that Disney+ is likely to experience increased revenue. Revenue is determined by both the number of subscribers and the subscription fee, which suggests a strong uptick in financial performance as the subscriber base grows.
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 impact of the increase in subscribers on the market equilibrium for Disney+ services, follow these steps:
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Label the Axes:
- Vertical Axis: Price
- Horizontal Axis: Quantity of subscribers
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Draw the Original Demand and Supply Curves:
- Demand Curve (D1): downward sloping from left to right.
- Supply Curve (S): upward sloping from left to right.
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Shift the Demand Curve Right:
- Due to the increase in subscribers, the demand curve will shift from D1 to D2 (D2 is right of D1).
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Identify the New Equilibrium:
- The intersection of the new demand curve (D2) and the supply curve (S) will dictate the new equilibrium price (P1) and quantity (Q1), indicating a price increase and an increase in quantity supplied.
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Annotate the Diagram:
- Clearly mark the original and new equilibrium points along with the respective prices and quantities.