The accompanying diagram shows the demand and supplycurves for taxi rides in New York City.Uber's entry into the market reduces the quantity of ridesdemanded from taxis at every price. On the accompanyinggraph, shift the demand curve to accurately represent thechange in demand. Then, move point E₁ to the newequilibrium point. The unlabeled point is to help you answerthe next question and is not movable.Assume that New York City politicians respond by imposinga regulated price of $2.50 per mile. Calculate consumersurplus, producer surplus, and total surplus for the taximarket after Uber has entered the market.Consumer surplus: $Producer surplus: $Total surplus: $millionmillionmillionPrice ($ per mile)5.04.54.03.53.02.52.01.51.00.50.002.501.30240.00600.00DS120 240 360 480 600 720 840 960 1,080 1,200Quantity of taxi rides (millions of miles)

Consumer surplus is the difference between actual price and the price which consumer is willing to…

Assume that New York City politicians respond by imposing a regulated price of $2.50 per mile. Calculate consumer surplus, producer surplus, and total surplus for the taxi market after Uber has entered the market. Consumer surplus: $ Producer surplus: $ Total surplus: $ million million million

Assume that New York City politicians respond by imposing a regulated price of $2.50 per mile. Calculate consumer surplus, producer surplus, and total surplus for the taxi market after Uber has entered the market. Consumer surplus: $ Producer surplus: $ Total surplus: $ million million million

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The accompanying diagram shows the demand and supply
curves for taxi rides in New York City.
Uber's entry into the market reduces the quantity of rides
demanded from taxis at every price. On the accompanying
graph, shift the demand curve to accurately represent the
change in demand. Then, move point E₁ to the new
equilibrium point. The unlabeled point is to help you answer
the next question and is not movable.
Assume that New York City politicians respond by imposing
a regulated price of $2.50 per mile. Calculate consumer
surplus, producer surplus, and total surplus for the taxi
market after Uber has entered the market.
Consumer surplus: $
Producer surplus: $
Total surplus: $
million
million
million
Price ($ per mile)
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
0
2.50
1.30
240.00
600.00
D
S
120 240 360 480 600 720 840 960 1,080 1,200
Quantity of taxi rides (millions of miles)

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