Explain why the government taxi authority

Assignment Help Business Economics

Reference no: EM131092431

In a city, the Taxi industry is regulated by the Government Taxi Authority. A company can only supply taxi services, if it is issued a licence by the Government taxi Authority. (Note: A licence does not place a limit on the number of taxi trips a company can supply.) The market for taxi trips in City has the following characteristics: Inverse demand for taxi trips is given by the function, P = 90 − Q/ 1000 In this equation, P is the price of a taxi trip, and Q is the total quantity of taxi trips supplied by licensed shuttle taxi companies. The marginal cost, to a taxi company, of supplying a taxi trip is $18. A taxi company’s only fixed cost is the cost of purchasing a licence from the Government Taxi Authority.

Question

Explain why the Government Taxi Authority has an incentive to only issue one licence. What problem does the Government Taxi Authority create if it only issues one licence?

Reference no: EM131092431

Questions Cloud

Business ethics concepts and cases class : Is the drug industry a good illustration of the market theories described in this chapter? Explain. How should the relations between drug and human life/health affect your views on drug industry monopoly profits? Explain.

What are humanistic and existential theories : Explain in details that what are humanistic and existential theories?Write 1000 words about Humanistic theory, explain the below terms.

Sold some stocks during the year : Patrick was born August 31, 1948 and worked as a hardware engineer at JCN Corporation, his taxable wages (after 401k deductions, etc.) is $37,000 for 2015 (he retired in March 2015). His wife Rose (born September 15, 1948) is an accounting manager..

Leadership theory and development : Leadership theory and development has been critical to many organisations. Facet of leadership in context is built on the tenets of people coming together to lead together in the bit to address real challenges as a team.

Explain why the government taxi authority : In a city, the Taxi industry is regulated by the Government Taxi Authority. A company can only supply taxi services, if it is issued a licence by the Government taxi Authority. Explain why the Government Taxi Authority has an incentive to only issue ..

People make automatic assumptions about individuals based : People make automatic assumptions about individuals based on his or her appearance. While certain assumptions are necessary part of life, judging a person totally based on appearance can be considered prejudice. Have you ever known someone who did no..

Tax effect whether it is salary-dividends or cash withdrawal : The following facts and circumstances are based on your written correspondence to me dated March 20, 2016. If these facts are incomplete or incorrect, please let me know as soon as possible. You are currently age 60 and single, you have recently reti..

Estimate of linear demand at the current price : A mining company is interested in obtaining the demand curve for coal. The firm's research department informs you the price elasticity of demand is -0.68, and the current price and quantity are $41 and 1,206 respectively. Price is measured in dollars..

Student-loan debt : Annie White graduated from coollege with a student-loan debt of 32000.The interest rate on this debt is 0.5%per month. if monthly payment on this loan are$618.65,how many months will it take for Annie to repay the entire loan?

User Account

All Pages