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Category > Economics Posted 17 May 2017 My Price 20.00

continuation of the topic

I need help with my homework please,

 

I have attached the home work assignment and pasted it below...

 

This will be a continuation of the topic of market clearing pricing strategy used by Uber, along with its other dimensions such as the sharing economy.

 

  • In the previous discussion, we considered a situation where Uber can charge a price greater than a traditional cab price for the same trip. In this case, let us consider when Uber charges a market price lower, relative to the Dallas based Cowboy Cab.1) Assume Mr. Smith is a Dallas local and loves to support local producers. Thus, he gains a higher marginal utility (benefit) when he consumes Cowboy cab compared to Uber. However, consider:
  • MU CowboyCab P CowboyCab  <MU Uber P Uber   MUCowboyCabPCowboyCab<MUUberPUber
  • i. Will Mr. Smith choose Uber or Cowboy Cab?
  • ii. What will happen to the marginal utility for that good once it has been consumed. Will it increase or decrease?
  • 2) With the introduction of Uber and Lift into the transportation industry previously run by taxi cabs, consider what has happened to the industry in terms of competition
  • i) Has it become more competitive or more monopolistic?
  • ii) Based off your answer, would you expect the long run economic profits of these firms to decrease?(1) Why or why not?

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SuperTutor
(15)
Status NEW Posted 17 May 2017 02:05 AM My Price 20.00

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