8. The marginal and average cost curves of taxis in Metropolis are constant at $0.20/mile. The demand
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8. The marginal and average cost curves of taxis in Metropolis are constant at $0.20/mile.
The demand curve for taxi trips in Metropolis is given by P 1 0.00001Q, where P is the fare, in dollars per mile, and Q is measured in miles per year. If the industry is perfectly competitive and each cab can provide exactly 10,000 miles/yr of service, how many cabs will there be in equilibrium and what will be the equilibrium fare?
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