Suppose That the Cost of Operating a Taxicab Is $25,000/year

question 21

Multiple Choice

Suppose that the cost of operating a taxicab is $25,000/year and that a cab in full-time operation will collect $35,000/year in fares.
-Refer to the information above.If taxi medallions (licences) are issued by the city government and cannot be sold,the existence of ________ economic profit would induce ________ the taxi industry.

• A) positive;exit from
• B) positive;entry into
• C) negative;exit from
• D) negative;entry into
• E) zero;no change in

---

Definitions:

Grapefruit

A citrus fruit known for its slightly bitter and sour taste, commonly used in juices, culinary dishes, and as a diet staple.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service versus what they actually receive, typically representing profits.

Producer Surplus

The split between the rate producers are willing to settle for a good or service and the rate they actually collect.

Producer Surplus

The discrepancy between what producers aim to get for their goods or services and the payment they truly obtain.