|Due By (Pacific Time)||11/29/2016 12:00 am|
A relatively new aspect to the marketplaces of a number of cities worldwide is something called the sharing economy, in which people rent assets such as cars and rooms directly from each other. Also, called a peer-to-peer economy these transactions are generally conducted via the Internet from dedicated Websites or mobile apps. Two of the faster-growing companies in this sharing economy are Uber, which is a ride-sharing service, and Airbnb, which helps travelers find lodging away from the traditional hotel market. Do some research on Uber and the sharing economy in general and then address the following:
1. Use your knowledge from Unit One: Discuss the sharing economy from a supply and demand standpoint. How do companies like Uber and Airbnb affect supply and demand in the markets for shared rides (taxis, limos, etc.) and rented rooms, respectively? Also, what does dynamic pricing mean in terms of Uber vs. traditional taxi cab rates.
2. Use your knowledge from Unit Two: How will the introduction of Uber affect the demand curve of the taxi cab industry? Explain your answer in terms of price elasticity, cross price elasticity, and elasticity of supply.
3. Use your knowledge from Unit Two: Suppose you need transportation to/from a social event in Dallas. Suppose you have disposable income that you have to allocate between transportation costs to/from this event (defined as “Good A”), and the rest of your income can be spent consuming goods/services at this event (defined as “Good B”). How can the introduction of Uber change your ability to consume goods A & B? How has this changed your overall level of utility?
4. User your knowledge form Unit Two: Look up the city of Dallas and its ongoing entanglement with Uber. What specifically will happen to Uber’s costs of production if Dallas policies banning Uber, and/or preventing dynamic pricing are successful? Explain who benefits and who loses when policies are created to prevent Uber from operating or using dynamic pricing?
5. Also, feel free to entertain me and your classmates with any additional interesting information you have uncovered with respect to the sharing economy and how it relates to topics covered in this class.
Grading note: Be aware that your grade is based on two categories.
Your ability to answer to the questions above with a careful combination of your opinion of the topic combined with your take on the economic models to support your opinion. It is ok to agree or disagree with economic theory, just be sure to support your argument while discussing the answers.
Your ability to constructively criticize a post from a fellow student. It is encouraged to agree, partially agree/disagree, or disagree with a student’s post. It is necessary to respond to at least one students post. It is also necessary to respond in a logical, non-emotional, polite and respectful manner. Discussing economic topics can get extremely emotional (it can divide friendships or even family). Your job is to use this discussion board as “practice” to remove emotion from your viewpoint and let logic and economic models guide you through a proper logical stance on the economic issue.
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