Surge Pricing: Uber, Hotels & Hurricane Plywood
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What students do
- Explain why an Uber fare jumps from $12 to $30 after a concert using a demand spike against a fixed supply of drivers
- Argue both sides of the debate over whether a price spike on hotel rooms during an emergency is price gouging or an efficient market signal
- Read a supply-and-demand chart to show how a $120 price cap below the $260 equilibrium creates a hotel room shortage
- Trace how a rising plywood price pulls quantity supplied from 2,000 to 5,000 sheets by drawing in out-of-town sellers
What it covers
- The two jobs a high price does at once, rationing scarce supply and signaling more of it to show up
- Three real surge markets side by side, Uber rides, hotel rooms, and hurricane plywood
- Both sides of the price-gouging debate, argued with the same supply-and-demand tools
Learning targets
- Explain surge (dynamic) pricing as a price that RISES when demand spikes against a fixed or slow-to-grow supply, to RATION the scarce supply
- Use a demand-spike chart to show why an Uber ride costs more at 2am after a concert - a MOVEMENT along the curve to a higher equilibrium price
- Explain how a high price acts as a SIGNAL that pulls more supply into a market (more drivers log on, more sellers ship plywood in)
- Argue both sides of the ethics debate: is a price spike unfair PRICE GOUGING, or an efficient market SIGNAL that rations supply and attracts more of it?
From one teacher to another
A price spike does two contradictory jobs at the exact same moment, it rations a supply that's running short and it signals more sellers to show up, and that tension is the whole point of the case study. Students run an Uber surge fare, a hotel-room shortage during an evacuation, and a plywood run before a hurricane through the same supply-and-demand chart, then argue whether each spike counts as gouging or a market doing its job. I kept the ethics debate genuinely open on both sides, because a case that only points one way doesn't teach the trade-off, it just teaches an opinion.
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