Restrictions on entry in the taxicab market tends to benefit _____ the most.
A)the government
B)original recipients of medallions
C)current taxicab drivers
D)taxicab passengers

Question

Quizplus · Accepted Answer

Restrictions on entry in the taxicab market usually take the form of limited medallions or licenses that can be granted to operate taxis. These medallions can be sold, and those who received them first, the original recipients, benefit the most as they can charge higher prices due to the limited supply of medallions. The government may also benefit from the sale of medallions or through licensing fees, but overall, the original recipients tend to be the ones who benefit the most. Current taxicab drivers may benefit from limited competition, but they would also have to bear the high costs of medallions, which can be passed on to passengers in the form of higher fares. Taxicab passengers, on the other hand, may experience higher fares and longer wait times due to limited supply, which is a disadvantage.

Restrictions on Entry in the Taxicab Market Tends to Benefit