Reference no: EM131077550

Eco Multiple Choices

1. Uber charges riders more during surge periods of high demand. For example, in New York City prices often surge when plays end and many people want rides home.

a. What happens to the quantity of drivers available during surge pricing, all else constant?

i. The quantity of drivers available increases when prices surge
ii. The quantity of drivers available decreases when prices surge
iii. The quantity of drivers available remains the same when prices surge
iv. The effect on the quantity of drivers available is indeterminate, the quantity may increase, decrease or remain the same

b. What happens to the quantity demanded during surge pricing all else constant?

i. The quantity demanded increases when prices surge
ii. The quantity demanded decreases when prices surge
iii. The quantity demanded remains the same when prices surge
iv. The effect on the quantity demanded is indeterminate, the quantity may increase, decrease or remain the same

c. When will a someone leaving the theater who is in a rush to get home to care for a sick child tend to have to wait longer for a ride during surge periods of high demand? Assume that an Uber ride is the best way for the person to get home quickly and that the person is willing to pay the surge price.

i. When surge price is not used and price is low
ii. When price surges and price is high
iii. Neither, the wait time remains the same when price surges
iv. Indeterminate, the wait time may increase, decrease, or remain the same when price surges

d. When the price of a ride is below the equilibrium price, who is more likely to have to wait a long time for a driver to appear?

i. Someone who is not in a rush
ii. Someone who needs to rush home to care for a sick child
iii. Neither, both have the same expected wait time
iv. Indeterminate, either person could have a longer expected time or the time could be the same

e. When the price of a ride equals the equilibrium price, who gets Uber rides when all else is constant?

i. Whoever is richest and wants a ride
ii. Whoever needs a ride the most
iii. Whoever is willing to wait in line the longest
iv. Whoever is willing to pay the market price and has the means to do so

f. Who will be willing to pay the higher price, all else constant?

i. Someone who needs to rush home to care for a sick child
ii. Someone who is not in a rush and can easily walk home
iii. Neither, both have the willingness to pay
iv. Indeterminate, either person could have the higher willingness to pay.