A bomb goes off in New York City. Thousands of people rush to get home, and call for an Uber car. This surge in demand causes all of the available drivers to be busy with fares. Now there are no available drivers, so Uber’s automated systems recognize this and increase fares, passing the fare increase to the drivers, thus luring more drivers off the couch and into taking fares to alleviate the surge.

This is a classic demonstration of the iron law of supply and demand. As demand increases, the availability of a product decreases, and prices increase. This has the dual effect of both increasing supply (more drivers want a shot at delivering the product at the increased price) and reducing demand (fewer passengers willing to pay the increased price) until the system again reaches equilibrium. That is exactly how supply and demand works, and the law of supply and demand is inviolable. As long as there is a product which consumers demand, as well as those who would supply that product, the law applies.

Of course, that doesn’t stop people from accusing Uber of profiteering. They don’t stop to consider factors which are affecting prices, mostly because they are self absorbed and don’t understand basic economics.

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