Suppose you observe that taxi fares per trip increased when more commuters took taxis.Which of the following is the best possible explanation?
A)The law of demand was violated.
B)The law of supply was violated.
C)The price of gasoline went up.
D)People were irrational.
E)Commuters did not have any choice.

Question

Quizplus · Accepted Answer

The increase in the price of gasoline led to an increase in the cost of providing taxi services, which led to an increase in taxi fares. This is an example of a shift in the supply curve, not a violation of the law of demand. The increase in demand for taxi services may have contributed to the increase in fares, but it is not the main cause. People were not necessarily irrational, and commuters likely had other transportation options available to them.

Suppose You Observe That Taxi Fares Per Trip Increased When