Answer to Question #193265 in Microeconomics for Patel

Question

A 2013 study in NYC showed that Uber was a substitute for taxis. If consumers substitute Uber elastically relative to the price of taxi rides, then we should expect the cross-price elasticity of Uber rides with respect to the price of taxi rides to be

A-Positive and less than one.

B-Negative and greater than one (in magnitude).

C-Negative and less than one (in magnitude).

D-Positive and greater than one.

E-All of above

Answer 1

D-Positive and greater than one.