University Economics Report: Netflix Pricing, GST, and Market Analysis
VerifiedAdded on  2019/11/26
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This report analyzes the economic impact of a Netflix price increase in Australia, attributed to the introduction of GST tax. The analysis begins by examining the shift in supply and demand curves, illustrating how the tax disrupts market equilibrium, leading to a higher price (Pt) and lower quantity (Qt) demanded. The report then explores the price elasticity of demand (PED) for Netflix products, concluding that they are price elastic. This elasticity means that consumers are sensitive to price changes, and the report illustrates how a small price increase leads to a significant drop in quantity demanded, which results in a decrease in Netflix's total revenue. Furthermore, the report investigates the tax incidence, arguing that Netflix will bear the greatest burden of the tax due to the elastic nature of its products. Finally, the report concludes that the GST tax will increase Netflix's production costs, reduce consumer demand, and lead to a decrease in the company's total revenue, as well as a loss of producer and consumer surplus, resulting in a deadweight loss.
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