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

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter3: Demand Analysis

Section: Chapter Questions

Problem 4E

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