Question 1

Uber is one of the giant private corporations in the United States, and its mobile app allows consumers to arrange transportation using a smartphone. Uber is currently operating in more than 60 countries thanks to new technology and the fluidity of mobile connectivity.Uber Technologies Inc. collects customer requests and routes them to nearby drivers who can serve them (with location and final destination information). A smartphone is, therefore, an essential component of a driver’s operational tools. Uber Technologies Inc. emerged in 2009 as the dominant player in the ride- sharing industry since it has been omnipresent and immense. UBER competes with several similar service providers such as Taxify, Zebra Cabs, Orange Cabs etc.

1.1 Justify the type of market structure that UBER operates in and evaluate the likelihood of UBER making an economic profit in the long-run. (20 Marks)

1.2 With the aid of a diagram, explain the economic theory underlying a kinked demand Justify whether it would be applicable in this case. (20 Marks)

Question 2

Panic buying is a globally witnessed behaviour during the outbreak of COVID-19. This consumer behaviour is related to many undesirable consequences, ranging from disrupting economic stability to hindering timely provision of supplies to those in dire need. As such, to understand the causes and underlying mechanisms of panic buying is crucial. Based on terror management theory, this study examined the contribution of perceived risk, social media use, and connection with close others to panic buying. Data were collected through an online survey from 972 Chinese citizens (65.9% female, Mage = 33.69 years) at the beginning period of COVID-19 in early February 2020. The results found that individuals with a higher level of perceived risk were more prone to engage in panic buying, but this link was mitigated by connection with close others when individuals less used social media. Theoretically, this study advances the understandings of the psychological processes of panic buying during health crisis. Practically, alleviating individuals’ perceived risk, establishing a healthy habit of social media use, and strengthening social ties are important to circumventing panic buying in times of COVID-19.

2.1 The fear of nationwide lockdowns due to the current Covid 19 pandemic has pushed many consumers into “panic buying”.

Critically evaluate this statement and use demand and supply analysis to analyse the possible impact of panic buying on market prices. (25 Marks)

2.2 Discuss, in detail, the two types of income elasticity and substantiate the type of income elasticity most applicable during this time. (25 Marks)

Answers to Above Questions

Market structure is defined as the ways in which various industries are classified and differentiated as per their degree and nature of competition for production services. Market structure can be of different types, and the case analysis of Uber indicates that the market structure in which the company Uber is in, is oligopolistic market structure. In this market structure type, there are few large firms that make up most of the market share and the case analysis of Uber indicates that it occupies a major position in the industry including some other competitors such as Taxify, Zebra Cabs, Orange Cabs etc. The likelihood of Uber making an economic profit in the long run is …….


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