4. The accompanying diagram illustrates a taxi drivers individual supply curve (assume that each taxi ride is

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4. The accompanying diagram illustrates a taxi driver’s individual supply curve (assume that each taxi ride is the same distance).

a. Suppose the city sets the price of taxi rides at $4 per ride, and at $4 the taxi driver is able to sell as many taxi rides as he desires. What is this taxi driver’s producer surplus?

(Recall that the area of a right triangle is 1⁄2 × the height of the triangle × the base of the triangle.)

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Essentials Of Economics

ISBN: 9781429218290

2nd Edition

Authors: Paul Krugman, Robin Wells, Kathryn Graddy

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