Surge pricing takes place when a service provider
- A.raises the price of its product or service as demand outstrips supply
- B.follows preset prices immune to demand and supply dynamics
- C.fixes a minimum price for its services
- D.fixes an average price on the basis of transactions carried over a day
Correct answer
Explanation
The correct answer is A, raises the price of its product or service as demand outstrips supply. Surge pricing is a form of dynamic pricing in which the price moves up when demand rises faster than the available supply. App-based taxi services are the best-known example: at peak hours, in heavy rain or after a big event, when many riders are looking for few cabs, the fare is multiplied. The higher price is meant to ration the scarce service and to draw more drivers on to the road, so it follows the basic law of demand and supply. Airlines and hotels use similar pricing in busy seasons. Option B is wrong because preset prices that ignore demand and supply are the opposite of surge pricing. Option C is wrong because fixing a minimum price is a price floor, not a demand-linked rise. Option D is wrong because a single daily average price does not change with the moment's demand. Exam tip: surge pricing means demand greater than supply, so the price rises in real time.
Practice Questions
View allThe Fourteenth Finance Commission assigned different weights to the following parameters for distribution of tax proceeds to the States :
1. Income distance
2. Population
3. Demographic changes
4. Area
Arrange the aforesaid parameters in descending order in terms of their weights.
- A.1-2-3-4
- B.1-2-4-3
- C.1-3-2-4
- D.4-3-2-1
Show answer
Income distance had the highest weight, followed by population, area and demographic change. The Fourteenth Finance Commission, chaired by Y.V.
Read the full explanation →Which one of the following statements for a firm's equilibrium in Perfect Competition is not correct ?
- A.The market price must be greater or equal to average variable cost in the short run.
- B.The market price must be equal to marginal cost.
- C.The market price must be equal to average cost in the long run.
- D.The marginal cost decreases at the equilibrium output.
Show answer
This statement is not correct, because at the equilibrium of a competitive firm marginal cost must be rising. A firm in perfect competition is a price taker, so the price it gets equals its marginal revenue.
Read the full explanation →Plan allocation in agriculture and irrigation as percentage of total plan outlay was highest in :
- A.Seventh Five-Year Plan
- B.Third Five-Year Plan
- C.First Five-Year Plan
- D.Second Five-Year Plan
Show answer
The First Plan (1951 to 1956) gave agriculture, community development and irrigation about a third of its outlay, the highest share in any Indian plan.
Read the full explanation →Which of the following is not included in the Capital Account of the Balance of Payments of a country?
- A.Foreign Direct Investment
- B.Commercial Borrowing
- C.Invisibles
- D.External Assistance
Show answer
Invisibles are part of the current account of the balance of payments, not the capital account. The balance of payments records all of a country's transactions with the rest of the world and has two main parts.
Read the full explanation →Which one among the following was the focus of the Twelfth Five-Year Plan?
- A.Sustainable and Inclusive Growth
- B.Social Justice and Equality
- C.Food, Work and Productivity
- D.Attainment of Self-reliance
Show answer
The Twelfth Five-Year Plan (2012-17) had the theme "Faster, More Inclusive and Sustainable Growth". It continued the inclusive-growth idea of the Eleventh Plan (2007-12), whose theme was "Towards Faster and More Inclusive Growth", and added sustainability as a stated goal.
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