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QUESTION
Problem 5. Assume that the taxi industry in Stony Brook is perfectly competitive.
Problem 5. Assume that the taxi industry in Stony Brook is perfectly competitive. Also, assume that the constant marginal cost of a taxi ride is 5$ per trip and that each taxi is capable of making 20 trips a day. Let the demand function for taxi rides each day be D(p) = 1, 100 − 20P.
a. What is the perfectly competitive price of a taxi ride?
b. How many rides will be made every day?
c. How many taxis will operate in Stony Brook?
