Suppose that the market for cab rides in a community is initially in long-run equilibrium. Subsequently, an increase in population increases the demand for cab rides. In the short run, the market price will _____, and the number of rides offered by a typical cab driver will _____.
A)rise; rise
B)rise; fall
C)fall; rise
D)fall; fall

Question

Quizplus · Accepted Answer

In the short run, an increase in demand leads to a higher market price due to the upward pressure on prices from increased demand. Additionally, cab drivers are likely to offer more rides to capitalize on the higher prices and increased demand, leading to an increase in the number of rides offered by a typical cab driver.

Suppose That the Market for Cab Rides in a Community