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

question 165

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.Suppose that entry into the taxi industry is restricted but medallions (licences) can be bought and sold.If the annual interest rate on savings accounts is 8%,then the equilibrium price of a medallion will be ________ and taxi drivers will earn ________ their opportunity cost.

• A) $10,000;more than
• B) $10,000;exactly
• C) $80,000;exactly
• D) $125,000;more than
• E) $125,000;exactly

---

Definitions:

Theoretical Grounds

The fundamental concepts, principles, or logics that underpin a theory, method, or reasoning.

Professional Wisdom

The deep knowledge and experience that professionals accumulate over time in their field of work, aiding in decision making and problem-solving.

Policy Assessment

The process of evaluating the effectiveness, outcomes, and impacts of public policies.

Social Policy Practice

The application of social policy principles and theories in real-world settings, often involving the development and implementation of programs aimed at improving societal welfare.