The market equilibrium for taxi service is shown by point a in the diagram to the right with a price of $3.00 and a quantity of 10,000 miles of service per day (100 taxis and 100 miles per taxi). A medallion policy reduces the quantity of taxi service to less than 10,000 miles per day (70 taxis and 100 miles per taxi). A consumer who is on the demand curve halfway between points c and a would be willing to pay for a mile of taxi service. (Enter your response to two decimal places.) A supplier who is halfway between points b and a on the supply curve will be willing to supply a mile of taxi service at a price of $ (Enter your response to two decimal places.) This transaction occur at the current price. per mile ($). Price 6.40- 6.00- 5.60- 5.20- 4.80- 4.40- 3.90 4.00- 3.60- 3.20 2.80 2.40 2.00- 1.60- 1.20-11.00 0.80- 0.40- 0.007 0 2.40 Taxi Medallions Supply w/ 70 medallions Supply 10,000 Demand 5,000 10,000 Miles of taxi service per day 15,000

The market equilibrium for taxi service is shown by point a in the diagram to the right with a price of $3.00 and a quantity of 10,000 miles of service per day (100 taxis and 100 miles per taxi). A medallion policy reduces the quantity of taxi service to less than 10,000 miles per day (70 taxis and 100 miles per taxi). A consumer who is on the demand curve halfway between points c and a would be willing to pay for a mile of taxi service. (Enter your response to two decimal places.) A supplier who is halfway between points b and a on the supply curve will be willing to supply a mile of taxi service at a price of $ (Enter your response to two decimal places.) This transaction occur at the current price. per mile ($). Price 6.40- 6.00- 5.60- 5.20- 4.80- 4.40- 3.90 4.00- 3.60- 3.20 2.80 2.40 2.00- 1.60- 1.20-11.00 0.80- 0.40- 0.007 0 2.40 Taxi Medallions Supply w/ 70 medallions Supply 10,000 Demand 5,000 10,000 Miles of taxi service per day 15,000

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter5: Consumer Choice: Individual And Market Demand

Section: Chapter Questions

Problem 2TY

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