Suppose that the market for ride-sharing services is initially in long-run equilibrium. Subsequently, a decrease in population decreases the demand for rides. In the short run, the price of rides will _____, and the number of rides offered by a typical ride-sharing firm will _____.
A)rise; rise
B)rise; fall
C)fall; rise
D)fall; fall

Question

Quizplus · Accepted Answer

In the short run, a decrease in demand leads to a lower price for rides as suppliers adjust to reduced demand. Consequently, the number of rides offered by a typical firm will also fall as they respond to decreased demand and lower prices.

Suppose That the Market for Ride-Sharing Services Is Initially in Long-Run