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Chapter 3: Supply and Demand

Pages: 126 - 164

7 Questions for Chapter 3: Supply and Demand

  1. 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?

    Found on Page 164
  2. In the following three situations, the market is initially in equilibrium. Explain the changes in either supply or demand that result from each event. After each event described below, does a surplus or shortage exist at the original equilibrium price? What will happen to the equilibrium price as a result?

    Found on Page 155
  3. 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.

    Found on Page 162
  4. Explain whether each of the following events represents (i) a shift of the demand curve or (ii) a movement along the demand curve.

    Found on Page 139
  5. When a new, faster computer chip is introduced, demand for computers using the older, slower chips decreases. Simultaneously, computer makers increase their production of computers containing the old chips in order to clear out their stocks of old chips.

    Found on Page 162
  6. 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.

    Found on Page 164
  7. 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?

    Found on Page 164

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