1. In order to ingratiate himself with voters, the mayor of Gotham City decides to lower the price of taxi rides. Assume, for simplicity, that all taxi rides are the same distance and therefore cost the same. The accompanying table shows the demand and supply schedules for taxi rides. Quantity of rides (millions per year) Quantity supplied Fare Quantity (per ride) demanded $7.00 10 12 6.50 11 11 6.00 12 10 5.50 13 5.00 14 8 4.50 15 7 b. Suppose that the mayor sets a price ceiling at $4.50. How large is the shortage of rides? Who loses and who benefits from this policy? Shortage of rides: million

1. In order to ingratiate himself with voters, the mayor of Gotham City decides to lower the price of taxi rides. Assume, for simplicity, that all taxi rides are the same distance and therefore cost the same. The accompanying table shows the demand and supply schedules for taxi rides. Quantity of rides (millions per year) Quantity supplied Fare Quantity (per ride) demanded $7.00 10 12 6.50 11 11 6.00 12 10 5.50 13 5.00 14 8 4.50 15 7 b. Suppose that the mayor sets a price ceiling at $4.50. How large is the shortage of rides? Who loses and who benefits from this policy? Shortage of rides: million

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter3: Demand And Supply

Section: Chapter Questions

Problem 50CTQ: Explain why voluntary Martians improve social welfare.

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