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

question 105

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 4%,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) $40,000;exactly
• D) $250,000;more than
• E) $250,000;exactly

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Definitions:

Social Dominance Orientation (SDO)

A personality trait that predicts individuals' support for social hierarchy and the extent to which they desire their in-group to dominate and be superior to out-groups.

Group-Level Competition

The competitive interactions that occur between distinct groups or teams, often to achieve superiority or a specific outcome.

Relative Gain

A concept in international relations that refers to the comparative advantage one party achieves over another, especially in cooperative or competitive scenarios.

Might Makes Right

A principle suggesting that those who are powerful or have the ability to enforce their will can define what is considered morally right or acceptable.