Economics Principle: Disruptive Technologies, Uber X and Point-to-Point Transport Market, Price Elasticity and Invisible Hand

Running Head: ECONOMICS PRINCIPLE
Economics Principle
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ECONOMICS PRINCIPLE
Table of Contents
Answer 1: Disruptive technologies..................................................................................................2
Answer i.......................................................................................................................................2
Answer ii......................................................................................................................................2
Answer 2: Uber X and point-to-point transport market...................................................................2
Answer i.......................................................................................................................................2
Answer ii......................................................................................................................................2
Answer iii.....................................................................................................................................3
Answer 3: Price Elasticity and Invisible Hand................................................................................5
Answer i.......................................................................................................................................5
Answer ii......................................................................................................................................5
References list..................................................................................................................................9
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ECONOMICS PRINCIPLE
Answer 1: Disruptive technologies
Answer i
A disruptive technology in business refers to an innovation which creates a new market
and network value. The newly created market eventually disrupts the already existing market and
replaces the established market affecting the leading firms, alliances and products. Such
technologies are generally developed by entrepreneurs operating outside the market (Ganguly,
Nilchiani and Farr 2017).
Answer ii
Introduction of Personal Computer is one example of disruptive technology. Prior to this,
there are typewriters that are used to type for different purposes. The personal computer driven
by new technology displaces typewriter and modifies the way to work and communicate.
Another known example of disruptive technology is Salesforce. It is a company that
specializes in offering Software as a Service (SaaS). This was initially aimed to serve small and
medium sized businesses (Selke 2016). Today, it is disrupting the primary provider of Customer
Relationship Management (CRM) software. CRM no longer host internal servers.
Answer 2: Uber X and point-to-point transport market
Answer i
The cost of a one way trip from Deakin College (Burwood) to Melbourne’s CBD using a
taxi ranges from $37.39 to $52.35 (taxifare.com.au 2018). The same trip using Uber X costs in
the range from $33.92 to $57.94 (taxifarefinder.com 2018).
Answer ii
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ECONOMICS PRINCIPLE
The first reason for difference in cost structure is the ridesharing service offered by Uber
X. With ride sharing marginal cost of additional customer reduces which allow Uber to charge a
relatively low fare. Another factor explaining the difference in cost structure is the taxi prices are
regulated having a set maximum level (Matherne and O’Toole 2017). Fare in Uber X on the
other hand is variable and fluctuate with market demand and market supply condition.
Answer iii
Figure 1: Point to Point transport market
The market scenario of point to point transport market is presented in figure 1. The given
figure is drawn with the assumption that only taxi operates in the market. With absence of Uber
X, the market demand curve for point to point service is given as DD. The corresponding market
supply curve is SS. The market equilibrium is acquired at E. This is the point where market
demand for point to point service meets with that of the supply of point to point service. The
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