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There are 100 people who need to get home on New Year's Eve and the average cost per ride is $20
There are 100 people who need to get home on New Year's Eve and the average cost per ride is $20. At these rate, all people are willing to pay the cost to get home.
Uber's surge pricing raises the average cost to $30 per ride (A price increase of 50%). However, most people don't leave too far from home, so 75 of them decide to walk. This leaves only 25 people who call Ubers (A 75% decrease in demand).
Now, calculate the price elasticity of demand and show the price elasticity by a curve. Explain the nature of demand curve you draw after calculation.
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