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Table: The Market for Taxi Rides
-(Table: The Market for Taxi Rides)Use Table: The Market for Taxi Rides.If a government quota limit at 9 million rides is imposed,the quota rent that will accrue to the owner of a taxi licence will be _____ per ride,but there will be a total missed opportunity (inefficiency)to consumers and producers of _____ million rides.
A) $1;1
B) $2;2
C) $3;3
D) $4;4

Question

Use the following to answer questions:
Table: The Market for Taxi Rides 
-(Table: The Market for Taxi Rides)Use Table: The Market for Taxi Rides.If a government quota limit at 9 million rides is imposed,the quota rent that will accrue to the owner of a taxi licence will be _____ per ride,but there will be a total missed opportunity (inefficiency)to consumers and producers of _____ million rides.
A) $1;1 
B) $2;2 
C) $3;3 
D) $4;4

Quizplus · Accepted Answer

The quota rent is the difference between the price of a ride with the quota and the price of a ride without the quota. In this case, the price of a ride with the quota is $10 and the price of a ride without the quota is $8. Therefore, the quota rent is $2. The total missed opportunity (inefficiency) to consumers and producers is the difference between the quantity of rides that would be produced without the quota and the quantity of rides that are produced with the quota. In this case, the quantity of rides that would be produced without the quota is 11 million and the quantity of rides that are produced with the quota is 9 million. Therefore, the total missed opportunity (inefficiency) to consumers and producers is 2 million rides.

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