Theoretically,the quota rent for a New York taxicab owner is equal to the market price of the licence that allows him to drive the cab.

Question

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The quota rent for a New York taxicab owner is equal to the market price of the licence because the owner can charge a higher fare than the cost of operating the cab, due to limited supply of cabs allowed on the road. This limited supply is created by the quota system that requires a licence to operate a taxi in NYC.

Theoretically,the Quota Rent for a New York Taxicab Owner Is