When every other company are planning to decrease their price to attract more customers, Netflix has made an announcement to increase their price by almost 60%! Their service changed from $9.99 per month into two different plans, which will cost $7.99 each and a total of $15.98 per month.

After Netflix announced their changing in the price for the services, so far, they have lost 1.0 million customers. Many of the customers are complaining about this move and and Netflix’s stock has had a significant drop, nearly 15%!

We are just learning elasticity of demand in econ 101. The demand for Netflix’s service should be elastic, thus a small raise in the price will have a big drop on quantity demand. Therefore, the Netflix’s CEO has made a really bad decision which will decrease the profit for the company.

However, if we do the math, a 60% increase in the price only caused 1 million customers to quit, which is only a decrease of 4.5% of the total demand, the total expenditure should actually increase by a lot!

Even though this decision might seems to hurt the company right now,  but as long as the customer does not decrease 60%, the company should be benefited in the long-run.

Tax Plan for Jobs Bill Has Familiar Ring

Everybody is waiting to see what President Obama is going to do in order to lead his country out of depression and hopefully, regain the nation’s power around the world.

Recently, Mr.Obama has proposed a new plan to increase taxes of the wealthy individuals and big corporations. If the assortment was passed by the council, the government would get over $400 billion, which could pay for the Job bill and help American citizens out of poverty.This seems like a good idea to help the government, but it got rejected by the council.

This “rob the rich to feed the poor” action would be favoured by the poor one’s, but what about the wealthier one? They wouldn’t just sit there and let others rob them. People would do everything to protect their property.

If this assortment was in action, it might cause people to not willing to work hard, which is no help for the depression. Or, people will find a different way to avoid paying taxes, which might cause new troubles for the government, more problems for the society.

Even though Mr.Obama wants to help his country, he need to find better way.

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