Discuss the following statement: ‘The sharp increase in cab fares on a snowy day in New...

Discuss the following statement: ‘The sharp increase in cab fares on a snowy day in New York led to severe criticism of Uber on social media, but a sharp increase in the price of gold has no such effect.’

Expert Solution

Answer

The cab fare of Uber highly depend on the demand- supply forces in the market. The higher the demand for Uber, the higher is the fare for Uber ride. The fare of Uber also depends on weather condition.Now, when its a snowy day, the demand for Uber ride increases.At this time, the Uber can be considered as an essential good. At this weather condition, many people want the Uber ride, but if the Uber hikes the fare, some people won't be able to afford the Uber ride. So, the sharp increase in the fare of Uber on a snowy evening led to severe criticism on social media.

The gold is a luxury good. It is highly valuable and thus t's price is always high. The demand for gold in the market is not as high as the demand for Uber on a snowy day in New York. Thus, if there is a sharp increase in the price of gold, it won't affect the common people much.

So, the sharp increase in cab fares on a snowy day in New York led to severe criticism of Uber on social media, but a sharp increase in the price of gold has no such effect.

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Rahul Sunny answered 1 year ago

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