Question

In: Economics

List three specific things that would cause the demand for ride-share services (i.e., Uber or Lyft)...

List three specific things that would cause the demand for ride-share services (i.e., Uber or Lyft) to shift. Use three different categories (all 5 listed below) of demand-shifters in your answer.

  • Changes in Income
    • Normal good – a good for which a positive relationship exists between changes in consumer income and changes in demand
    • Inferior good – a good for which an inverse relationship exists between changes in consumer income and changes in demand
  • Prices of related goods
    • Substitutes – goods for which a positive relationship exists between changes in the price of one and changes in demand for the other
    • Complements – goods for which an inverse relationship exists between changes in the price of one and changes in demand for the other
  • Changes in Consumer Tastes
    • Fads
    • Changes in quality
  • Changes in Consumer Expectations
    • Changes in Price Expectations
    • Changes in Income Expectations
  • The size of the market

Solutions

Expert Solution

A shift in the demand curve of a good takes place when determinants of demand other than the price of the good changes. In the present case, the ride-share services like Uber or Lyft are normal goods. So, changes in the following things will shift the demand curve of ride-share services to shift.

Changes in Income: Being a normal good, a positive relationship exists between changes in consumer income and changes in demand for ride-share services. So, an increase in income will shift the demand curve upward to the right, as people shift from public transport to ride-sharing services.

Price of Related Goods: In the present case Uber and Lyft are perfect substitutes. So, an increase in the price of one will raise the demand for the other (shifting demand curve upward to the right), and vice-a-versa.

Changes in Consumer Tastes: This is also one of the factors other than price that will shift the demand curve of the ride-sharing services.


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