Question
Suppose Netflix has two types of consumers: intensive users and casual users. There are 20 intensive users, each having an inverse demand of ! =
Suppose Netflix has two types of consumers: intensive users and casual users. There are 20 intensive users, each having an inverse demand of ! = 0.6 0.01!. There are 80 casual users, each having an inverse demand " = 0.4 0.02". The quantities in each demand curve are for hours of streaming service per month. Netflix's marginal cost of providing an hour of streaming is 0. Netflix is committed to charging only a fixed monthly membership fee, no charges per hour of streaming. a. What monthly membership fee should Netflix charge? Show your results on a graph. QE PE = 4,000,000 -100 QU 000 20PU = 1,000, - b. Would your answer change if there were instead 50 intensive users and 50 casual users? Explain the reasoning for your answer and show calculations.
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