Order the answer to: Redo all the parts of…
| Question | Redo all the parts of Problem, describing the long-run effects instead of the short-run effects. Assume that cab driving is a decreasing-cost industry. a. The price of gas falls. b. The rental price of cabs falls. c. Word gets out that Gus is a really lousy driver. d. A new bus company opens up. e. Gus gets the bill for the new upholstery he installed in his back seat last month and discovers it’s 15% more than he expected. f. The wages of factory workers go up, though this ends up having no effect on the demand for cab rides. g. A huge fire destroys half the cabs in town, not including Gus’s. h. The city imposes a $1 excise tax on cab rides, but exempts Gus from the tax because he is a good friend of the mayor. i. The city imposes a $100 annual license fee on cab drivers, but gives Gus a free license because he is a good friend of the mayor. j. The city starts a new free taxi service, which offers free rides to 500 customers per day. k. The city offers to subsidize gas purchases for every cab driver except Gus because he is a special enemy of the mayor. l. The city announces that it will start fining cab drivers who play loud music; Gus (unlike most cab drivers) loves loud music, so he has to pay a lot of fines. m. A customer who was almost killed by Gus’s recklessness agrees to accept a large payment in exchange for keeping quiet about the incident. |
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| Subject | business-economics |
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