1. The growth of ride-sharing services such as Uber and Lyft has generated much discussion in the news. Drivers operate as independent businesses, working as many hours as they choose and earning a portion of the fares set by the company. However, during periods of high demand, the market price increases (such as âsurgeâ pricing by Uber). Provide a few reasons why ride-sharing companies share the characteristics of a perfectly competitive industry.â¨
2. The opening of formal Cuban relations with the United States has led to greater trade between the two countries, especially in perfectly competitive products such as sugar, tobacco, and oranges. Explain what is likely to happen in the market for these agricultural products under increased trade with Cuba, and how that might affect individual farmers in the United States. What are the potential benefits to consumers and other producers?
3. One can typically find a high-quality color laser printer for $300, which comes pre-installed with four color-toner cartridges that are about half-filled. However, the cost of replacing all four toner cartridges is usually over $400. Why would companies charge more to replace the toner than to buy the printer itself? â¨
4. The taxi industry in many large cities spends millions of dollars lobbying local policymakers not to build rail links connecting airports to the city center, even if such mass transportation infrastructure would benefit many consumers traveling to and from the airport. Explain why such actions by the taxi industry are taken. Then, explain why taxis in cities without airport rail links are less likely to invest in fuel-efficient cars and in-taxi technologies such as televisions and Internet access.â¨â¨
1. The growth of ride-sharing services such as Uber and Lyft has generated much discussion in the news. Drivers operate as independent businesses, working as many hours as they choose and earning a portion of the fares set by the company. However, during periods of high demand, the market price increases (such as âsurgeâ pricing by Uber). Provide a few reasons why ride-sharing companies share the characteristics of a perfectly competitive industry.â¨
2. The opening of formal Cuban relations with the United States has led to greater trade between the two countries, especially in perfectly competitive products such as sugar, tobacco, and oranges. Explain what is likely to happen in the market for these agricultural products under increased trade with Cuba, and how that might affect individual farmers in the United States. What are the potential benefits to consumers and other producers?
3. One can typically find a high-quality color laser printer for $300, which comes pre-installed with four color-toner cartridges that are about half-filled. However, the cost of replacing all four toner cartridges is usually over $400. Why would companies charge more to replace the toner than to buy the printer itself? â¨
4. The taxi industry in many large cities spends millions of dollars lobbying local policymakers not to build rail links connecting airports to the city center, even if such mass transportation infrastructure would benefit many consumers traveling to and from the airport. Explain why such actions by the taxi industry are taken. Then, explain why taxis in cities without airport rail links are less likely to invest in fuel-efficient cars and in-taxi technologies such as televisions and Internet access.â¨â¨
