The price of streaming services has been $10 a month or zero. Amazon and Pandora Media are poised to change the streaming scene. Pandora is a streaming Internet radio service, and its new $5 version will be more like Spotify and Apple Music, which let users create their own playlists. Amazon, which offers limited on-demand music for $99 a year, is expected to expand its catalog and offer it for $10 a month or $5 a month for customers who use the Echo, Amazon's voice-activated speaker system.

Source:The New York Times, September 11, 2016 Assume that the marginal social cost of streaming is zero.

(This assumption means that the cost of operating a streaming service doesn't change if more people stream more songs.)

1. Draw a graph of the market for streaming music with a price of $10 a month. On your graph, show consumer surplus and producer surplus.
2. With a price of $10 a month, is the market efficient or inefficient? If it is inefficient, show the deadweight loss on your graph.
3. If the $5 price described in the news clip were adopted, how would consumer surplus, producer surplus, and the deadweight loss change?
4. If the $5 price described in the news clip were adopted, would the market be efficient or inefficient? Explain.
5. Is the $5 price described in the news clip a competitive market price? Explain.