If New York City had no medallion system for taxicabs, assuming that the supply curve of taxicab rides is upward-sloping and the demand curve for taxicab rides is downward-sloping, the price of a taxicab ride would:
A) increase because of the higher safety hazards.
B) not change from its current level.
C) decrease.
D) increase, but only slightly.

Question

Quizplus · Accepted Answer

Without a medallion system, there would be more competition among taxicab drivers, leading to an increase in the supply of taxicab rides. This would cause the price of a taxicab ride to decrease, assuming demand remains constant.

If New York City Had No Medallion System for Taxicabs