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ULAB 2122 FINAL EXAM ANSWER KEY

Part I (11 marks)


Based on the text, answer the following questions.

1. What advantages can the following parties gain by using the services provided by
Uber?
a) Customers
Able to enjoy alternative transportation service (½m)

b) People with personal cars


i) Able to earn extra income (½m)
ii) Able to have flexible work schedule (½m)
Para I , L 3-5
Cars mostly sit parked while their value depreciates, but Uber, Grab, and others make it possible for anyone
to use their cars to offer taxi-like services.” and the whole of paragraph

c) Unemployed or underemployed individuals


Able to have a job (½m)
Para I, L5-7
Unemployed and underemployed people, too, represent wasted productive assets. The sharing economy generates value by
matching these assets with consumers willingness to pay for the services those assets could provide.”
(2 marks) LOTS

2. How do ridesharing services impact a community?

- The community gets to become technologically savvy (1m) because of the use of
smartphones, GPS, payment systems, identification, feedback mechanisms
etc...(1m)
Para I, L10-12
The genius of the sharing economy, however, was to harness new technologies — smartphones, GPS,
payment systems, identification, feedback mechanisms —

- The community receives increased job opportunities (1m) which help to increase
their income and they could be spending or saving more (1m)
Para IV, last line
They also found that drivers tend to sign up because of the flexibility of the work and that many use Uber as a
way to smooth income, either between jobs or as a complement to other jobs.

- The community has better choices for the same services (1m) and they can choose
to consume either one with a higher or lower rate. (1m)
Para VII, Line 5 – last line
However, in the new world of taxi competition, consumers can switch providers at low cost. As a result,
traditional taxis may face a new incentive to compete. Competing on price in the short run is difficult —
prices are typically regulated and change infrequently. They might also compete on quality — making sure
their cars are clean and features like credit card readers are operable, running the air conditioner in the
summer, not talking on cell phones, and so on.

Accept any 2 answers (2 x 2m = 4 marks) HOTS

3. From a financial perspective, how do Uber and taxi drivers perceive ridesharing
services?
1
a) Uber drivers:
Financially, Uber drivers see ridesharing as a window of opportunity to increase
income for their household. (1m)
Para IV, L1-9
At least part of Uber’s response to regulatory threats has been to release studies highlighting benefits to the
drivers. Uber has claimed that a full-time driver can make $75,000 -$90,000 annually, compared to the
$30,000 typical of a taxi driver (McFarland, 2014), although some have questioned those numbers (Kosoff,
2014). Hall and Krueger (2015) note in a study done for Uber that in the first three months of 2014 Uber
distributed $657 million to drivers in the United States. They also found that drivers tend to sign up because
of the flexibility of the work and that many use Uber as a way to smooth income, either between jobs or as a
complement to other jobs.

b) Taxi drivers:
Financially, taxi drivers see ridesharing as a threat to their source of income. (1m)
Para 3, 7 lines from the bottom
While consumers flocked to these new services, traditional taxi companies instead flocked to their regulators
and politicians, hoping to block these new competitors (Saitto, 2015). Many regulators have been sympathetic
to taxi companies, and some cities and countries have even banned these new services (Tarantola, 2015).
Nevertheless, demand for these services has been so strong that they have been able to overcome much of this
hostility (with exceptions, of course, like France and Las Vegas) (Reuters, 2015).
(2 x 1m = 2 marks) HOTS

4. Complete the table.

Comparison between Traditional Taxi Industry and New Taxi Industry

Effects Traditional taxi industry New taxi industry


1. Not using taxis
Incur lower cost if not using taxis
- Incur cost
by switching providers
 Convenience
E.g. switch to bus/ train
Customers
 Money
E.g. other car services/ use
own car
2. Complain to taxi company
 No effect  Some effect
Taxi
Reason: No incentive to improve Reason: New incentive to compete
industry
and make changes
services

(6 x ½m = 3 marks)
Para VII, L1-7
In the traditional world of taxi, dissatisfied consumers had few options. They could incur extra costs to avoid taxis
— in terms of convenience if switching to the bus or subway or in terms of money if switching to car services or
using one’s own car instead of taking cabs. Alternatively, they could complain about the poor service to the taxi
regulator. Either way, taxi cabs had little incentive to improve service. However, in the new world of taxi
competition, consumers can switch providers at low cost. As a result, traditional taxis may face a new incentive to
compete.

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Part II (12 marks)

Based on the text, answer the following questions.

1. What counter argument does the author present to those who find ridesharing service
unsafe for drivers and its passengers?

a) For drivers
Unlike taxi drivers, ridesharing drivers do not face the possibility of being
assaulted because they do not carry cash and their passengers are not anonymous.
Para III, L7-10
In contrast, sharing economy companies’ rides are notable for two reasons: no cash ever changes hands, and passengers are not
anonymous. These important differences remove major incentives for violent assaults and ensure that any ridesharing passenger
who commits a crime during a ride will be easier to apprehend.
(1 mark) LOTS
b) For passengers
Uber has taken the precautionary steps to screen their drivers for crimes.
Paragraph IV, L10-15
Are ridesharing passengers taking their lives into their hands with poorly vetted and potentially dangerous drivers? It is inevitable
that, among a large and growing group of rideshare drivers, some of them will turn out to be bad apples. Traditional taxi drivers
sometimes have run-ins with the law as well. The operative question is: Are ridesharing companies taking proper precautions to
protect their passengers’ safety? Are they screening their drivers adequately? Uber requires that an applicant driver have none of
the following violations on his or her record over the past seven years: hit and runs, fatal accidents, reckless driving, violent
crimes, sexual offenses, gun-related violations, resisting or evading arrest, driving without insurance, and drug-related abuses
(1 mark) LOTS

2. Complete the table.

Driving Insurance Policy & Coverage

Types of Drivers Types of Insurance Policy Coverage

Full-time
professional commercial insurance (½m) driver & passenger
drivers

Normal drivers personal insurance driver only

Ride-sharing personal insurance (½m) does not cover driver while


drivers driving for a fee & passengers
(1m)

(2 marks)
Para V, L 1-13 (LOTS)
One of the most commonly raised safety concerns about ridesharing relates to insurance. The problem is that peer-to-peer
ridesharing occupies a no-man’s-land that falls between the traditionally distinct domains of personal and commercial insurance.
Full-time professional drivers are generally covered by commercial insurance for any accidents that occur while driving on
company business. The rest of us, meanwhile, obtain policies to cover the risks associated with our own “amateur” driving.
Rideshare drivers do not fit comfortably into this traditional framework. Many rideshare drivers provide rides on a part-time
basis and do not have commercial insurance, which typically is much more expensive than personal liability policies. The
drivers’ personal policies, however, to a large extent would exclude coverage of any injuries or damage caused when a driver is
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carrying passengers for a fee. This state of affairs raises the troubling possibility that the new ridesharing industry is imposing
risks on drivers, passengers, and third parties who are not adequately insured

3. In paragraph V, the writer states that Uber and Grab avoid responsibility for accidents
caused by their drivers since they are only facilitating the meeting between drivers
and passengers.

a) Do you agree with this statement? a) Do you agree with this statement?
No (½m) Yes (½m)

b) What is your opinion of this policy? b) What is your opinion of this policy?

- It’s an unfair policy (1m) and - They are just matching the drivers
violates the workers’ right to be and their passangers (1m) hence any
protected while carrying out their accidents are the responsibility of
duties (1m). or drivers (1m). or

- The administrators are being - The ridesharing companies are not


irresponsible of the welfare of their the ones causing the accidents (1m)
drivers and passengers (1m) after so the culprit has to bear the
gaining profits from employees and responsibility (1m).
consumers (1m).
Note: Accept other opinions, not in favour Note: Accept other opinions, in favour of
of this policy. this policy.
(2½ marks) HOTS (2½ marks) HOTS

Para V, 7 lines from the bottom


...like dating sites, they are merely facilitating matches between drivers and passengers. Thus, they bear no legal responsibility
for injuries or property damage caused by drivers. It remains to be seen whether this policy or to what extent this denial of
liability will hold up in court.

4. a) Is the author in full agreement, partial agreement or disagreement on the safety


issue of ridesharing services?
Partial agreement (½ m)

b) Explain the writer’s stance.


The writer disagrees with the critics who claims that ridesharing is entirely not safe
(½ m) but highlights one grave safety concern (½ m), which is the lack of insurance
policy for Uber and Grab drivers (½ m).

( 1½ marks) HOTS

Para II, L7 until the end of para


The claim about the safety of ridesharing relate to the well-being of both drivers and passengers, as well as third
parties who might suffer personal injury or property damage in accidents involving ridesharing vehicles, which is
more dangerous than traditional taxis. Indeed, the ridesharing business model offers big safety advantages as far as
drivers are concern. That said, there are legitimate concerns about how ridesharing is insured, which will need to

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be sorted out as the new industry continues to develop. Overall, however, concerns about the safety risks of
ridesharing are overblown”

and Para VI, L 7-11


Nevertheless, the emergence of a new industry that puts people into strangers’ cars does give rise to legitimate safety
concerns. Furthermore, ridesharing’s business model of matching consumers with independent service providers raises novel
legal issues regarding whether and to what extent rideshare companies are legally liable for the actions of the drivers that use
their apps.

5. From what perspective has the writer analysed the issue of ridesharing? Provide two
(2) pieces of evidence from the text.

Perspective: Safety or Legal

Choose any 1 of the answer


(1 mark) HOTS
Evidence 1: The claim about the safety of ridesharing relate to the well-being of both
drivers and passengers, as well as third parties who might suffer personal injury or
property damage in accidents involving ridesharing vehicles, which is more
dangerous than traditional taxis. (1 mark) HOTS
Para II, L2

Evidence 2: Any discussion of the relative safety of ridesharing versus traditional


taxis should begin with the drivers, who historically have borne the greatest safety
risks associated with rides for hire. On one hand, taxi drivers face an unusually high
risk of nonfatal violent assaults. Taxi drivers are vulnerable to assaults because often
carry cash. In addition, their job consists of giving rides to anonymous strangers. It is
therefore unsurprising that taxis make such inviting targets for robberies. Sharing
economy companies’ rides, on the other hand, are notable for two reasons: no cash
ever changes hands, and passengers are not anonymous.
(1 mark) HOTS
Para III, L1

Above are evidence if the student writes safety as the answer. Accept other relevant evidence extracted from
the text.

Evidence 1: Lurking behind these concerns about insurance are unresolved legal
questions about who exactly is liable when a ridesharing vehicle is involved in an
accident. Uber and Grab, for their part, have staked out legal positions denying
liability for accidents that occur in the use of their services.
(1 mark) HOTS

Evidence 2: Thus, they bear no legal responsibility for injuries or property damage
caused by drivers. It remains to be seen whether this policy or to what extent this
denial of liability will hold up in court.
(1 mark) HOTS
Above are evidence if the student writes legal as the answer. Accept other relevant evidence extracted from
the text.

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Part III (7 marks)
Based on texts 1 and 2, answer the following questions.

1. Taxi companies face unfair competition from ridesharing providers. In your own
words, explain how both writers support this statement.
(2 marks)
a) Taxi companies do not want the competition/lose financially to ridesharing
providers. (1m)
b) Taxi companies are competing unfaily with uber drivers because they are heavily
imposed with regulations whereas ridehsaring providers are not. (1m)

Text 1 Text 2
Lyft, Sidecar, Grab and Uber are the most prominent ride- Uber requires that an applicant driver have none of the
sharing services, with Uber by far the largest of those. following violations on his or her record over the past
Within a span of five years, from 2009 to mid-2014, there seven years: hit and runs, fatal accidents, reckless driving,
were an astounding increase of users – from eight to violent crimes, sexual offenses, gun-related violations,
twenty million – and drivers – from 160,000 to 200, 000, resisting or evading arrest, driving without insurance, and
spreading from 250 cities to 500 cities across 70 countries drug-related abuses. In contrast, fingerprint scans are
(Smith, 2017). In December 2014, venture capitalists employed in background checks on taxi driver applicants
valued Uber at about $40 billion (Wessel, 2014). One in big cities such as New York, Los Angeles and Chicago.
reason for this phenomenal success was undoubtedly the It has been argued that ridesharing companies’ failure to
ability of technology to break down artificial regulatory conduct fingerprint scans means that their background
entry barriers. Most cities, for example, impose high checks are not as rigorous and heavily regulated as those
restrictions on the number of taxis allowed to operate; as a carried out by many taxi companies
result, prices were either higher than they would have
been otherwise or there were not enough cabs to meet
demand (Frankena & Pautler,1984).

2. How do writers of both texts present their conclusion? Explain by paraphrasing


relevant information from both texts and provide proper citations.
(5 marks)
Both writers recommend changes on the taxi industry (1m) whereby quality and
services need to be improved (1m) (Wallsten, 2015) (½ m) and regulations need to be
revised (1m). (Feeney, 2015) (½ m)
Text 1 Text 2
As a result, traditional taxis may face a new incentive to In particular, heavily regulated taxi drivers have a valid
compete. Competing on price in the short run is difficult point when they complain that they have to compete on an
— prices are typically regulated and change infrequently. unlevel playing field with less regulated rideshare
They might also compete on quality — making sure their companies. But the appropriate response to this problem
cars are clean and features like credit card readers is to rationalize and modernize the out dated and heavy-
operable, running the air conditioner in the summer, not handed restrictions on taxis — not to extend those
talking on cell phones, and so on. restrictions on ridesharing.

Note: Award 4 marks for content and citation as shown in the answer.
Award 1 marks for showing ability to synthesize and summarize ideas sophisticatedly but only ½
marks for attempt to synthesize and summarize ideas.