Question

It has been shown (Chen, NYT) that the service of food deliveries by delivery app companies include markups ranging from 25% to 91%. This means that, in those cases, the customer was paying between 125% and 191% of what the restaurant charged. Which of these explains how the principle of Voluntary Exchange applies to this scenario?

(Check all that apply.)
a. The restaurant participates in the exchange because they are selling a meal they would not otherwise sell. The consumer participates (even at an extraordinary markup) because he believes the meal + delivery is "worth it".
b. When the consumer decides to spend his dollars on the delivery service, he is _not_ able to spend those dollars on gas for his car.
c. As a delivery service adds more and more drivers for a static number of restaurants, the per capita income of the drivers decreases, unless restaurants increase their output.
d. The restaurant and consumer are participating in voluntary exchange, but the delivery service is not.
e. Both the delivery service and the consumer engage in voluntary exchange, because they both think it is "worth it".
f. Both the restaurant and the delivery service participate in the voluntary exchange; they both gain from it.

Answer 1

In the scenario where delivery app companies mark up prices for food delivery, the principle of voluntary exchange is exhibited as the consumer and delivery service both agree to the transaction terms, each believing it benefits them. Restaurants partner with delivery services to expand their customer base. The agreement is viewed as mutually advantageous despite markups.

Step-by-step explanation:

The concept of voluntary exchange is a fundamental tenet of economics, where both parties involved in a transaction believe that the exchange will be beneficial to them. In the scenario where food delivery app companies charge markups ranging from 25% to 91%, both the consumer and the delivery service are engaging in a voluntary exchange. The consumer agrees to the higher price presumably because of the convenience and value they place on the delivery service.

Similarly, the delivery service agrees to provide the service for the price listed, gaining profit from the markup. The third party in this scenario, the restaurant, also participates in this exchange by partnering with the delivery service to reach customers they might not otherwise serve, potentially increasing their sales despite the delivery service's markup.