Company decides to lower the price of taxi rides. Assume, for simplicity, that all taxi rides are the same distance and therefore cost the same. The accompanying table shows the demand and supply schedules for taxi rides.

Quantity of rides

Fare per ride $: Quantity demanded Quantity supplied

7 10 12

6.50 11 11

6 12 10

5.50 13 9

5 14 8

4.50 15 7

Suppose that the Company sets a price ceiling at $5.50. How large is the shortage of rides? Illustrate with a diagram. Who loses and who benefits from this policy?