How Business of Streaming Movies Affect Netflix - Essay Example

As individuals continue to think that Netflix stands for great compelling entertainment, the speed with which streaming movies adopt in general, and in particular, looks to be importantly slower compared to previous anticipation. To survive, Netflix should spend more on initial programming with an effort to draw closer more customers. The original investment will be of a positive effect in the long run.

Question two
According to an article in the Wall Street Journal: In early January last year, after a disappointing Charismas season and amid worries about competition from discount retailers, Zale Corp. decided to shake things up: The self-proclaimed jeweler to Middle America was going to chase upscale customers….The move was a disaster. The Irving, Texas, retailer lost many of its traditional customers without winning the new ones it coveted. (From Ann Zimmerman and Kris Hudson, “Chasing Upscale Customers Tarnishes Mass-Market Jeweller,” Wall Street Journal, June 26, 2006. P. A1.

Why would a firm like Zale abandon one market niche for another market niche? We know that in this case, the move was not successful. Can you think of other cases where the company successfully changed its business strategy?
Answer
Firms like Zale may move from one market niche to another market niche due to monopolistic competition. This is where many firms compete in a market, there are no barriers to entry, and products available in the market are differentiated. The weak economy and fierce competition led Zale to move to another market niche (Mihaljevic, 2013)
Question three
a. Was the dry cleaner practicing price discrimination, as defined in the textbook? Briefly explain.

Answer
Dry cleaning is indirectly practicing price discrimination as there exists a difference in the cost involved in accomplishing the work. Besides, there is a big difference in price we are not aware of in case it is the real costs’ differences.
b. As an economist, do you support laws like this one? Briefly explain.

Answer
As an economist, I am not in support of laws such as this as hair grooming, dry cleaning, and laundry are jobs that can be executed in various ways for gender. For instance, men have less hair compared to women who have more hair though cutting the hair of men needs more precision and skills than cutting a woman’s hair as it is always longer. Likewise, in laundry, more time is taken when handling women’s clothes as compared to men’s clothes.

Part Two: Problem-Solving Question
4. The Demand and Cost functions for a company are estimated to be as follows:
P=170-5Q
TC=40+50Q+5Q^2
What price should the company charge if it wants to maximize its profit in the short run?

Answer

Knowing the price that maximizes the profit differentiates the equation (Tewari, 2013)
For maximum profits Mc=Mr
Where by R=P.Q=170Q-5Q2
MR=170-5Q
MC=50+5Q
170-50=10Q
Q=20/10
Q=2
P=170-10
P=160 Read More