Suppose that taxi services and ride - share services are substitute goods for households. Assume that the supply curves for taxi and ride - share services are upward - sloping and the demand curves are downward - sloping. Consider the effect of an increase in licensing costs for ride - share service providers on the markets for taxi and ride - share services by answering the questions below. You are not required to draw any diagrams but may include them if you wish. a. Explain the partial equilibrium effect on the market for ride-share services. b. Explain the general equilibrium spill-over effect on the taxi services market. c. Explain the general equilibrium feedback effect on the ride-share market. d. If the supply curve for the taxi services market is instead perfectly inelastic and the supply curve for ride- share services perfectly elastic, would the effects you have outlined in a., b. and c. be larger or smaller or vanish altogether?

Suppose that taxi services and ride - share services are substitute goods for households. Assume that the supply curves for taxi and ride - share services are upward - sloping and the demand curves are downward - sloping. Consider the effect of an increase in licensing costs for ride - share service providers on the markets for taxi and ride - share services by answering the questions below. You are not required to draw any diagrams but may include them if you wish. a. Explain the partial equilibrium effect on the market for ride-share services. b. Explain the general equilibrium spill-over effect on the taxi services market. c. Explain the general equilibrium feedback effect on the ride-share market. d. If the supply curve for the taxi services market is instead perfectly inelastic and the supply curve for ride- share services perfectly elastic, would the effects you have outlined in a., b. and c. be larger or smaller or vanish altogether?

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter4: Markets In Action

Section: Chapter Questions

Problem 1SQP

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