Consider a small suburb about 20 miles north of a major city with an international airport. Residents typically commute to the major city for work, entertainment and travel. With a high price for parking facilities in the city during the week, (parking is free on weekends), rather than use their own vehicles for their commute, some residents rely on other modes of transportation. These alternatives include the publicly provided bus, publicly provided (railroad) train, or a privately provided taxicab, among others. A popular alternative is taxicabs. The demand for a trip with a taxicab is described by the following equation: QD = 2590 - 75P - 0.4M + 80PR, where QD represents the number of taxi trips (one-way) demanded per week. Since commuters work and live in different places in the city and in the suburb respectively, the total price paid per taxi trip varies with the time it takes to complete the trip and the length of the trip. To account for this variation, P represents the average price of a taxi trip. M represents the average consumer income earmarked for commuting; and PR represents the price of a related good. The supply of a trip with a taxicab is described the equation: Qs = - 150 + 25P, where Qs represents the number of taxi trips (one-way) supplied per week. The local government, with a desire to reduce traffic congestion in the city, has required all taxi drivers to have a yearly renewable permit to operate which is already taken into account in the supply equation. However, a recent report indicates that even with the high price for parking facilities, and the permit requirement for taxi operation, the city continues to face a congestion problem. A preliminary conclusion from the report suggests that taxi trips is the main problem. In an effort to address the congestion problem, the government has called a meeting of its policy advisors to determine what type of policy would be effective in addressing this issue. At this meeting, two policies are currently being discussed - a price control or a tax on the suppliers of taxi trip. The policy makers are aware that taxi trips vary with time and length, and so an ad valorem tax is proposed. Currently, the market is in equilibrium; the average consumer income earmarked for commuting, M, is $750 and the price of the related good, PR, is $18.

1. What are the current market price and quantity of taxi trips traded? The current market price is _____ and the quntity of trips traded is______ taxi trips per week.

Now consider that to address the congestion problem, the government imposes a price control of $41 in this market.

2. Given the government's policy, what are the market price (price consumers pay) and the quantity of taxi-trips traded?

given the government's policy, the market price is $________ and the quantity traded is____ taxi trips per week

3.The government's revenue from this policy is $_______

4. What can be said about the current market outcome?

Currently the market is/is not in equalibrium and the current quantity traded is sufficient/ not sufficient?