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Suppose a City Limits the Number of Cabs That Can

Question 18

Multiple Choice

Suppose a city limits the number of cabs that can provide taxi service by issuing medallions.
If the medallions can be bought and sold and they command a positive price,you can conclude that:


A) fares are above the competitive levels.
B) no illegal cabs will operate in the city.
C) the demand for cabs is lesser than the supply of cabs.
D) the supply curve for taxicabs is horizontal.

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