Suppose that the cost of operating a taxicab is $25,000/year and that a cab in full-time operation will collect $35,000/year in fares.
-Refer to the information above.If taxi medallions (licences)are issued by the city government and cannot be sold,the existence of ________ economic profit would induce ________ the taxi industry.
A) positive;exit from
B) positive;entry into
C) negative;exit from
D) negative;entry into
E) zero;no change in

Question

Quizplus · Accepted Answer

The economic profit is positive ($35,000 - $25,000 = $10,000), which would induce entry into the taxi industry if medallions were available.

Suppose That the Cost of Operating a Taxicab Is $25,000/year