A limousine service is located on the north side of Indianapolis. It specializes in transporting people to and from the Indianapolis airport, although it will deliver people anywhere in the Indianapolis area. It competes with taxis and public transportation as well as people deciding to drive their own cars. The demand for the firm's services has been increased as more consumers use the service for convenience and due to higher parking rates at the airport. However, increases in gasoline prices and wage rates for drivers have increased costs for the firm. Describe the supply and demand shifts that are occurring for this firm. What recommendations do you have for Speedy to offset the impact of their increasing costs? What recommendations do you have for Speedy to increase their total revenues? (graphs might help in your description)
This situation involves an outward shift in the demand curve accompanied by an inward shift in the supply curve. The firm can no longer provide the service at the same price because its costs have increased. However, more people want the ...
Recommendations for increasing revenues of a limousine service