Q1. Do you agree or disagree with Uber’s surge pricing policy? How would you modify it?

Uber’s surge pricing is rational because it creates a dynamic way of shifting the supply curve to answer
shifts in the demand curve. If the price was to stay constant as demand increased, there would not be
enough cars available to answer all the demand and some clients will thus be left unsatisfied. Raising the
price with a concomitant increase in demand makes the customer’s willingness to pay the deciding
factor of who gets a car instead of it being the order of arrival at the service. The added pay would also
incentivize more drivers to drive which will increase the supply of drivers and help lower the price.
However, Uber should recognize humanitarian boundaries when implementing its surge pricing
algorithms. It should avoid putting it into effect during crisis and catastrophes as this might deter people
from using the service to aid victims. It could do that by monitoring abnormal spikes in demand based
on data collected in the past and triggering an alert. An operator would then verify whether the increase
in demand is due to a humanitarian issue and disable the surge pricing feature.