Last week, you learned the concept of "elasticity". This week, you will evaluate and discuss its relevance as you compar

[answerhappygod]

Last week, you learned the concept of "elasticity". This week,
you will evaluate and discuss its relevance as you compare and
contrast two real-world decisions by two different companies.
Case 1: In July 2011, Netflix implemented a plan
to split up its DVD + instant streaming plan into 3 separate plans:
(1) DVD only, (2) streaming only, and (3) DVD + streaming. The
price for the DVD + streaming plan would be raised from $10 to $16.
The rate hike caused a loss of subscriber base to the tune of 1
million [reported in the following article in
the Huffington Post" http://www.huffingtonpost.com/2011/09/1 ... 64026.html ]
and a huge drop in the share price of Netflix. The company
defended its decision and implemented the change nonetheless.
Case 2: Around September 2011, Bank of America announced that,
beginning in early 2012, it would start charging its customers $5 a
month for using their debit cards [the following is an article from
the Christian Science
monitor: http://www.csmonitor.com/Business/2011/ ... t-card-use.
Following the tremendous backlash from credit card holders, the
company abandoned its plans and did not implement its new fee.
Required:
Compare and contrast the two cases.
What elasticity considerations
would Netflix and BankAm have considered in
their individual decisions? Why did they react differently to
essentially similar customer responses?