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,economic theory would predict that 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 no limit on the number of taxicabs on the road, leading to an increase in supply of taxicab rides. With a downward sloping demand curve, this would result in a decrease in price. Therefore, the price of a taxicab ride would decrease.

If New York City Had No Medallion System for Taxicabs,assuming