Are taxi rides elastic or inelastic and why?

Answer 1

Taxi rides are generally considered to be elastic in nature, as demand can significantly change in response to price fluctuations. When fares increase, passengers may seek alternative transportation options like public transit, ridesharing services, or walking, resulting in a decrease in demand. Conversely, if prices drop, more people may opt for taxis, indicating sensitivity to price changes. However, in certain scenarios, such as emergencies or lack of alternatives, demand can become inelastic.