Viraj’s Supply and Demand Assignment

https://www.thestar.com/news/gta/2016/05/12/fare-bargain-triples-ridership-on-upx.htm

Ridership increases on the Union Pearson Express as fares are slashed. The decrease in the price of the fare has led to triple the number of riders than before the fare cuts. Before the change in price, the ridership hovered between 2,000 and 2,200 a day but has increased immediately to 5,000 a day after the fare was cut and continues to grow at 6% a week with about 6,500 people using it regularly now. This is due to change in price. As the price of the fare decreases, the quantity demanded would increase as a new equilibrium price is set. As the suppliers are willing to provide more for a cheaper price, the quantity demanded rises to match that amount. A reason behind this decision would be supplier expectation. The suppliers, or Union Pearson Express, expected the drop in price to drastically increase the ridership, thus also netting more profits. Because the suppliers are willing to provide more service for a lower price, the supply curve shifts to the right, bringing the equilibrium price to shift right and down. In conclusion, the supply curve shifts to the right, the price drops, the quantity demanded increases.

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