In New York City, government limits on the supply of taxis resulted in a price ________ the competitive market level, which would typically ________ economic efficiency.

Question

Quizplus · Accepted Answer

The government limits on the supply of taxis in New York City resulted in a price above the competitive market level. This is because a restricted supply would increase the demand for taxis, leading to higher prices. This artificial increase in price reduces economic efficiency by reducing the quantity of taxis available for hire, resulting in unmet demand and inefficiently low levels of output.

In New York City, Government Limits on the Supply of Taxis