New York City Limits the Number of Taxi Cabs That

question 196

Multiple Choice

New York City limits the number of taxi cabs that can legally operate in the city. The most likely result of this practice is that

• A) cab fares will be lower.
• B) cab fares will be higher.
• C) the cost of operating a taxicab will be lower.
• D) subway fares will decrease.

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Definitions:

Net Operating Income

The total profit of a business after operating expenses are subtracted from gross revenue, but before taxes and interest are deducted.

Variable Expenses Per Unit

Costs that change directly in proportion to changes in production or sales volume, calculated on a per unit basis.

Fixed Expenses

Expenses that remain constant regardless of production volume or sales efforts, like lease payments or wages.

Variable Expenses

Costs that fluctuate with production volume or business activity levels, such as materials and labor.