Consider the market for taxis within Australia. Assume that new regulation cancels the earlier requirement for all taxis to have a special licence.

1. Whatwouldhappentothesupplyoftaxirides?Assumingthatcustomersdonotcareaboutthe licences, what would happen to the demand for taxi rides?
2. What would happen to the equilibrium price of taxi rides? What would happen to the equilibrium quantity of taxi rides?Show your answers in a diagram and explain.
3. Is the change in equilibrium quantity less, more, or equal to the horizontal shift in the demand or supply curve? Explain why, using your previous diagram.