Question

How does Uber’s surge pricing solve the problem described in question 2?   Assess Kalanick’s claim that the price is set to leave as few people as possible without a ride.

What accounts for the fact that during good weather there are typically enough taxis for everyone, but during snowstorms, there typically are not enough?

Answer 1

• Surge pricing costs more to customers for same ride. Demand and supply for rides decide the surge pricing. High demand relative to supply of cabs leads to the surge pricing. here, more people tend to go for ride but only those who are ready to pay more are likely to get cabs first.
• During the good weather, more people prefer to go without cab or prefer to use public transport. Further supply of cab is also sufficient during the good weather. Hence, there are enough taxis for everyone. But during the snowstorms, taxis may be short in supply and everyone wants to hire taxi for safer and convenient travelling. Hence, there are not enough taxis during the snowstorms.