When the Company Netflix First Began,it Wasn't as Successful as Expected.This

question 286

Multiple Choice

When the company Netflix first began,it wasn't as successful as expected.This may have been because

• A)the program wasn't subscription-based.
• B)too many customers failed to return the VHS cassettes.
• C)the price of postage increased dramatically and ate into profits.
• D)too many free movies were now available through on-demand cable TV and streaming via the Internet.
• E)the primary target market,consisting of young people aged 18 to 24 years old,had declining interest in movies,spending more time listening to music and playing video games.

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Definitions:

Substitution Effect

The substitution effect occurs when consumers replace more expensive items with less costly alternatives.

Income Effect

A change in the quantity demanded of a good or service as a result of a change in real income (purchasing power).

Inferior Good

A type of good for which demand declines as the income of individuals or the economy increases, opposite to normal goods.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute a cheaper good for a more expensive one.