Logout Open In App
Open In App
Warning: foreach() argument must be of type array|object, bool given in /var/www/html/web/app/themes/studypress-core-theme/template-parts/header/mobile-offcanvas.php on line 20

Chapter 3: Q1. (page 164)

What accounts for the fact that before Uber's arrival, there were typically enough taxis available for everyone who wanted one on good weather days, but not enough available on bad weather days?

Short Answer

Expert verified

The taxi fares were not enough to compensate during the bad weather days.

Step by step solution

01

Explanation 

In New York City, during bad weather days, taxis are not available as everyone knows the price since city regulators set it. The taxis drivers do not have any incentive to drive during bad weather as they are paid the same as normal days. Thus, the shortage of taxis during bad weather days is removed after Uber's arrival as Uber charges more during bad weather days.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

For each of the following, determine (i) the market in question; (ii) whether a shift in demand or supply occurred, the direction of the shift, and what induced the shift; and (iii) the effect of the shift on the equilibrium price and the equilibrium quantity.

  1. As U.S. gasoline prices fell during the 1990s, more people bought large cars.
  2. As technological innovation has lowered the cost of recycling used paper, fresh paper made from recycled stock is used more frequently.
  3. When a local cable company offers cheaper on-demand films, local movie theaters have more unfilled seats.

Use a supply and demand diagram to illustrate how Uber drivers can cause prices to surge by taking coordinated breaks. Why is this strategy unlikely to work in New York, a large city with an established fleet of taxis?

Explain whether each of the following events represents (i) a shift of the demand curve or (ii) a movement along the demand curve.

  1. A store owner finds that customers are willing to pay more for umbrellas on rainy days.
  2. When Circus Cruise Lines offered reduced prices for summer cruises in the Caribbean, their number of bookings increased sharply.
  3. People buy more long-stem roses the week of Valentine’s Day, even though the prices are higher than at other times during the year.
  4. A sharp rise in the price of gasoline leads many commuters to join carpools in order to reduce their gasoline purchases.

How does Uber’s surge pricing solve the problem? Assess Kalanick’s claim that the price is set to leave as few people as possible without a ride.

Question: Explain whether each of the following events represents (i) a shift of the supply curve or (ii) a movement along the supply curve.

  1. More homeowners put their houses up for sale during a real estate boom that causes house prices to rise.
  2. Many strawberry farmers open temporary roadside stands during harvest season, even though prices are usually low at that time.
  3. Immediately after the school year begins, fast-food chains must raise wages, which represent the price of labor, to attract workers.
  4. Many construction workers temporarily move to areas that have suffered hurricane damage, lured by higher wages.
  5. Since new technologies have made it possible to build larger cruise ships (which are cheaper to run per passenger), Caribbean cruise lines offer more cabins, at lower prices, than before.
See all solutions

Recommended explanations on Economics Textbooks

Taxation Economics

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free