Ch. 4 Micro Reflection
1. One would expect Uber or Lyft entering a market to reduce the demand for taxi medallions. Those services serve as substitutes for taxis, so the demand curve would shift to the left for taxi medallions.
2. I lived in the DC metro area during the notorious cupcake boom. Within a year or two there were boutique cupcake shops opening up in all of the desirable neighborhoods. In early days those shops could charge an immense amount for one of their treats as people flooded in to be part of the new fad. Shops opened at about the same rate as people getting tired of expensive cupcakes, so the supply surged while demand plummeted. A lot of those shops either closed or changed to selling doughnuts, which I think was the next confection fad to sweep our nation’s capitol.
3. I live in a town that, according to the most recent census, houses 485 people. As of last month, it is also home to two movie theaters. They are across the street from one another. With the new establishment came a surge of interest in going to the movies among residents in town. In a perfect market, one would expect the the quantity of movies available to increase, with the movement of the price unknown to me but ultimately based on how much demand increased along with supply.