Uber has long been criticized for its use of surge pricing, setting prices based on current supply and demand factors, which, at times, results in a sudden and drastic increase in prices. Ina wall street Journal article, the CEO of Uber was asked if we are seeing the end of surge pricing. His response “at the end of the day, Friday night is three or five times bigger than a Sunday night in any city around the world. And if you ‘ve got enough supply on the system to that we were perfectly supplied on a Friday night for a much demand as a city could ever throw at us, then the rest of the week you have drivers not making a living”. Diagrammatically, the demand and supply conditions in Miami on Sunday and Friday nights. The consumer and producer surplus on a Friday night without surge pricing. The effect of surge pricing on consumer and producer surplus. Concept Introduction: Consumer Surplus : The difference between the price that the consumers are willing to pay for a unit of product and the price they actually pay. Producer Surplus: The difference between the price a seller offers and the minimum price at which he will offer to sell a unit of a product.

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Answer 1

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Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 4, Problem 12P

To determine

Uber has long been criticized for its use of surge pricing, setting prices based on current supply and demand factors, which, at times, results in a sudden and drastic increase in prices. Ina wall street Journal article, the CEO of Uber was asked if we are seeing the end of surge pricing. His response “at the end of the day, Friday night is three or five times bigger than a Sunday night in any city around the world. And if you ‘ve got enough supply on the system to that we were perfectly supplied on a Friday night for a much demand as a city could ever throw at us, then the rest of the week you have drivers not making a living”.

Diagrammatically, the demand and supply conditions in Miami on Sunday and Friday nights.

The consumer and producer surplus on a Friday night without surge pricing.

The effect of surge pricing on consumer and producer surplus.

Concept Introduction:

Consumer Surplus:

The difference between the price that the consumers are willing to pay for a unit of product and the price they actually pay.

Producer Surplus:

The difference between the price a seller offers and the minimum price at which he will offer to sell a unit of a product.

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M” method Given the following model, solve by the method of “M”. (see image)

As indicated in the attached image, U.S. earnings for high- and low-skill workers as measured by educational attainment began diverging in the 1980s. The remaining questions in this problem set use the model for the labor market developed in class to walk through potential explanations for this trend. 1. Assume that there are just two types of workers, low- and high-skill. As a result, there are two labor markets: supply and demand for low-skill workers and supply and demand for high-skill workers. Using two carefully drawn labor-market figures, show that an increase in the demand for high skill workers can explain an increase in the relative wage of high-skill workers. 2. Using the same assumptions as in the previous question, use two carefully drawn labor-market figures to show that an increase in the supply of low-skill workers can explain an increase in the relative wage of high-skill workers.

Answer 2

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Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 4, Problem 12P

To determine

Uber has long been criticized for its use of surge pricing, setting prices based on current supply and demand factors, which, at times, results in a sudden and drastic increase in prices. Ina wall street Journal article, the CEO of Uber was asked if we are seeing the end of surge pricing. His response “at the end of the day, Friday night is three or five times bigger than a Sunday night in any city around the world. And if you ‘ve got enough supply on the system to that we were perfectly supplied on a Friday night for a much demand as a city could ever throw at us, then the rest of the week you have drivers not making a living”.

Diagrammatically, the demand and supply conditions in Miami on Sunday and Friday nights.

The consumer and producer surplus on a Friday night without surge pricing.

The effect of surge pricing on consumer and producer surplus.

Concept Introduction:

Consumer Surplus:

The difference between the price that the consumers are willing to pay for a unit of product and the price they actually pay.

Producer Surplus:

The difference between the price a seller offers and the minimum price at which he will offer to sell a unit of a product.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 3

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 4, Problem 12P

To determine

Uber has long been criticized for its use of surge pricing, setting prices based on current supply and demand factors, which, at times, results in a sudden and drastic increase in prices. Ina wall street Journal article, the CEO of Uber was asked if we are seeing the end of surge pricing. His response “at the end of the day, Friday night is three or five times bigger than a Sunday night in any city around the world. And if you ‘ve got enough supply on the system to that we were perfectly supplied on a Friday night for a much demand as a city could ever throw at us, then the rest of the week you have drivers not making a living”.

Diagrammatically, the demand and supply conditions in Miami on Sunday and Friday nights.

The consumer and producer surplus on a Friday night without surge pricing.

The effect of surge pricing on consumer and producer surplus.

Concept Introduction:

Consumer Surplus:

The difference between the price that the consumers are willing to pay for a unit of product and the price they actually pay.

Producer Surplus:

The difference between the price a seller offers and the minimum price at which he will offer to sell a unit of a product.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

Chapter 4, Problem 12P

To determine