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Taxi Operators Must Buy a Medallion from the Municipal Government

Question 10

Multiple Choice

Taxi operators must buy a medallion from the municipal government. If the price of these medallions rises, we expect the fares charged by taxi operators to ________ because ________.


A) rise; higher input prices decrease supply
B) rise; higher input price increase demand
C) rise; there would be more taxis
D) fall; taxi rides are a luxury service
E) fall; passengers substitute bus rides

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