Essay/Term paper: America online to unveil flat fee for internet access

Essay, term paper, research paper:  Economics

America Online To Unveil Flat Fee For Internet Access



The Internet is becoming more popular and more widely used, and the
Market for internet access is growing rapidly. To stay competitive in this
fast-moving industry, America Online has announced that they will switch their
price plan for internet access.to a flat-fee rate of $19.95 per month.

After the changed in price (decrease), the Supply curve
"S" will shift to "S1". An increase in Supply curve will
increase (Quantity) people using America Online and decrease
Price.

America Online has announced a change to their price plan for internet
access. before they charged a rate of $19.95 for only 20 hours of internet
access. One of the many reasons is that it could help the service against
Internet competitors, by doing this "Keith Benjamin says there may be some
short-term negative impact on margins." Negative impact on margins means that
there will be decrease in earnings. Another reason for this pricing move is
part of a broader effort to add new features to the service and make it more
compelling than rivals.

Since America Online's price is lower people will tend to use America
Online more. This is a competitive market as America Online lowers their price,
other competitors will lower their price too. This will happen until they
reach the Equilibrium.

By staying in this fast-moving industry, America Online has unveiled a
set of features that include enhancements to listening to audio on-line, better
methods for viewing video on-line, and tools for media companies to spruce up
their on-line fare. In Addition to that America Online also expected to unveil
another initiative whereby Internet-service providers could offer their
subscribers easy access to America Online in return for ad revenue.