Suppose the market supply curve for movie tickets is given by p = 1 50QS + 7.5 and the market demand curve is given by p = 30 1 50QD + 5n where n is an "indicator" that takes on the value 1 if Netflix raises its price and 0 if it does not.

(a) Suppose Netflix does not raise its price so n = 0. What is the equilibrium price and quantity of movie tickets sold?

(b) Draw the market for movie tickets. Be sure to fully label your diagram.

(c) Now suppose Netflix raises its price so n = 1. What do you predict will happen to the equilibrium price and quantity of movie tickets, i.e. will price/quantity rise or fall? (d) What is the new equilibrium price and quantity of movie tickets traded?

(e) Update your graph to include the new demand curve and equilibrium.