Question 1: Demand and Supply Model

Part A: Consider the book subscription service industry, and the various competitors within it. These services allow consumers to download books to read on electronic readers, phones, tablets, laptops, computers, etc.

An ebook platform called "Binar Books" has done some research to create demand schedule showing how many monthly subscriptions (the quantity demanded) the market (they and their competitors) can sell, at various price points.

Subscription Service Demand Schedule
Scenario	Monthly Price per Subscription (in dollars)	Subscriptions (in millions)
A	$10.00	100
B	$12.00	60
C	$14.00	40
D	$16.00	30
E	$18.00	40

• Plot the various scenarios (points) on a graph.
• Clearly label the axis
• Draw a Blue line through the points to illustrate the trend in the demand.

1. points total)

Part B: Binary Books has determined that due to the high costs of computer servers required to provide a subscription service, each service is only willing to sell a certain number of monthly subscriptions depending on the price point the consumers are willing to accept.

Subscription Service Supply Schedule
Scenario	Monthly Price per Subscription (in dollars)	Subscriptions (in millions)
1	$10	30
2	$12	35
3	$14	40
4	$16	50
5	$18	60

• Plot the various scenarios (points) on the same graph as above.
• Draw a RED line through the points to illustrate the trend in the supply.

(2 points total)

Part C: Answer the following

• What is the equilibrium price? Label this point on the axis (2 points)

See next page for Q2 and the rest of the assignment.

Question 2: Analysis of change and the impact on Demand and Supply

Part A: Explain how the curves and price would change if a new technology emerged, lowering the cost of the subscriptions?

(2 points)

Answer specifically as follows:

The demand curve will ____________________ , (unchanged, movement along, shift right, shift left). Bold your selection.

Explanation:

The supply curve will _________________ (unchanged, movement along, shift right, shift left). Bold your selection.

Explanation:

Part B: Explain how the curves and price would change for subscription service providers if book sellers of hard copy books (substitute services to the subscription service providers) decreased the prices of all of their books by at least 20%? (2 points)

Answer specifically as follows:

The demand curve will ____________________ , (unchanged, movement along, shift right, shift left). Bold your selection.

Explanation:

The supply curve will _________________ (unchanged, movement along, shift right, shift left). Bold your selection.

Explanation: