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1/ Two economic concepts that stood out to me during the podcast was supply and demand curve and consumer surplus. It was neat hearing that these two concepts were highly recognized in the economic field yet there were no tangible examples. Uber, as a business offers great examples for supply and demand as well as consumer surplus. Uber sets it price based off of supply and demand. The price runs up and down the supply and demand curve during times of shortages, surpluses and times of equilibrium. Lyft is the only true competitor but can’t hold a candle to Uber. As the dominant player in the market, Uber can almost set its own prices, lowering them when there are a high amount of drivers and few people seeking rides. The price surges when supply and demand flip. The second concept, consumer surplus had always been a guessing game before Uber. Economists would create 10 imaginary universes of the consumer and estimate what the consumer was willing to pay and finding the difference between that and the actual price. With Uber, consumer surplus can be seen by taking data of users opening their phones and not ordering a ride. This shows that a consumer checked the price and was unwilling to pay that amount. This data makes consumer surplus very easy to calculate as you can derive an average of what consumers are willing to pay for the service provided.
2/ After listening and evaluating the Freakonomics podcast, I noticed two things in particular that really caught my attention. In the podcast, Levitt mentioned and explained how economist’s view uber. Levitt mentions how in many ways, uber is the embodiment of how economists would like the economy to look like. Based on the podcast, uber prices respond to supply and demand. For example, when a lot of people are looking for rides and not enough drivers, uber will raise their price. However, prices stay low when there are more drivers than people looking for rides. I believe this plays a huge role in supply and demand, because when theirs a great amount of demand for a good or service, the demand curve will shift causing the prices to go up. In addition, when theirs an influx of supply, the supply curve will cause the prices to go down. Furthermore, Levitt also mentions how important the demand curve is. The demand curve is important, because it tells the supplies that are producing the goods or service how much they should be charging. As I previously explained when supply grows, the demand curve tends to get move along the graph, which causes suppliers to raise their prices. In many cases if theirs too many people looking for rides and not enough drivers, this will create a shortage on the supply and demand curve. Hence there would be a surplus if their were to many drivers, and not enough people looking for rides.