A New York City taxi medallion, which gives the owner a license to operate a taxi,...

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A New York City taxi medallion, which gives the owner a licenseto operate a taxi, is a valuable commodity. Medallions trade in aweekly market at about a $1M each. There are 15,000 medallionsoutstanding today, the same as over 75 years ago. The taxi servicesmarket is an example of monopoly-like control of competitionsanctioned by government regulation -- the New York City TaxiCommission. In the New York City taxi market, suppose weekly demandfor taxi trips is estimated as Q = 10 - 0.5P, where Q is the numberof trips in millions and P is the average dollar price of one trip.Meter rates currently regulated by the New York City TaxiCommission imply that $15 is the average fare per trip. Afully-utilized taxi can make a maximum of 140 trips per week. Thetypical taxi's total cost of providing Q weekly trips is C(Q) = 140+ 10Q. Total cost includes driver wages, normal economic profitsfor the investment in a medallion, taxi depreciation and fuel.Prepare an analysis of the NYC taxi market and answer each questionbelow.
a. Instead of limiting the number of medallions to 15,000,suppose the Commission charges a profits tax to anyone that wantsto provide taxi service. At the average regulated fare, what is themaximum tax the Taxi Commission should charge per fully-utilizedtaxi and how many fully-utilized taxis should serve NYC?

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Given No Of Medallions 1M each No Of outstanding medallions 15000 demand function for taxi trips per week Q 1005P Where Q no Of trips in millions And P average rate per See Answer

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A New York City taxi medallion, which gives the owner a licenseto operate a taxi, is a valuable commodity. Medallions trade in aweekly market at about a $1M each. There are 15,000 medallionsoutstanding today, the same as over 75 years ago. The taxi servicesmarket is an example of monopoly-like control of competitionsanctioned by government regulation -- the New York City TaxiCommission. In the New York City taxi market, suppose weekly demandfor taxi trips is estimated as Q = 10 - 0.5P, where Q is the numberof trips in millions and P is the average dollar price of one trip.Meter rates currently regulated by the New York City TaxiCommission imply that $15 is the average fare per trip. Afully-utilized taxi can make a maximum of 140 trips per week. Thetypical taxi's total cost of providing Q weekly trips is C(Q) = 140+ 10Q. Total cost includes driver wages, normal economic profitsfor the investment in a medallion, taxi depreciation and fuel.Prepare an analysis of the NYC taxi market and answer each questionbelow.a. Instead of limiting the number of medallions to 15,000,suppose the Commission charges a profits tax to anyone that wantsto provide taxi service. At the average regulated fare, what is themaximum tax the Taxi Commission should charge per fully-utilizedtaxi and how many fully-utilized taxis should serve NYC?