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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. November 2019 Disney+ subscribers (million) 10 D... 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 its:
Answer
The correct answer is D. Revenue. As the number of subscribers grows significantly from 10 million in November 2019 to 50 million in April 2020, it indicates a substantial increase in revenue for Disney+. Other options such as fixed costs, income elasticity of demand, and price elasticity of demand are not directly relevant to the data presented.
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 increase in subscribers impacting market equilibrium, follow these steps:
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Label the Axes: Draw the vertical axis as 'Price' and the horizontal axis as 'Quantity'.
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Original Curves: Draw the initial demand curve (D1) and supply curve (S). The point where they intersect is the original equilibrium (P1, Q1).
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Shift the Demand Curve: As the subscriber numbers increase, shift the demand curve to the right (D2). This represents increased demand for Disney+ services.
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New Equilibrium: Identify the new equilibrium where D2 intersects the supply curve (S). This point will be at a higher price (P2) and a higher quantity (Q2).
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Diagram: The diagram should clearly show the shift from D1 to D2, the original equilibrium at (P1, Q1), and the new equilibrium at (P2, Q2).
In summary, the demand curve shift to the right leads to a higher price and increased quantity, reflecting the change in market equilibrium.