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Diagram 2.2 above shows a predicted elasticity curve for the upcoming 3 months after price has increased. Before the price increase in 2015, Netflix has 3.62 million of new subscriber in 3 months. From the elasticity of demand calculated above, -8.15, can be used to estimate the number of subscribers lost after they increased their price to $9.99. Given my assumptions, the critical price elasticity of labor demand for a minimum wage increase of 25% is around -0.2. But I had assumed that there is no unemployment insurance. Danziger does not make that assumption. In fact, he shows that unemployment benefits are critical in locating the equilibrium value of price elasticity of labor demand.

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