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Without Restrictions,the Market Supply Curve Is Horizontal at P =

Question 81

Multiple Choice

Without restrictions,the market supply curve is horizontal at P = 5,and the inverse demand curve for taxi cab rides is P = 20 - Q in a competitive market.Subsequently,only 10 taxi cabs are allowed in the market.After the market adjusts to the restricted supply,


A) there will be a decrease in consumer surplus.
B) the remaining taxi cab drivers will make positive economic profits.
C) there will be an increase in producer surplus.
D) All of the above.

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