In 1990, the town of Ham Harbour had a morecrless free market in taxi services. Any respectable rm could provide taxi services as long as the drivers and cabs satised certain safety standards. Let us suppose that the marginal cost per trip of a taxi ride is $1 8, and that the average taxi has a capacity of 30 trips per day. There are no other costs. Let the demand function for taxi rides be given by Dfp) : 2100 20p, where demand is measured in rides per day, and price is measured in dollars. Assume that the industry is perfectly competitive. Part1: a) (0.5 marks) What is the competitive equilibrium price per ride? (Hint: in competitive equilibrium, price must be equal to marginal cost. 0 b) {0.5 marks) What is the equilibrium number of rides per day? 0 c) (0.5 marks) How many taxi cabs will there be in equilibrium? 0 Pan 2: In 1990, the city council of Ham Harbour created a taxi cab licensing board and issued a license to each of the existing cabs. The board stated that it would continue to adjust the taxi cab fares so that the demand for rides equals the supply of rides, but no new licenses will be issued in the future. In 1995, costs had not changed, butthe demand curve for taxi cab rides had become Dfp) = 2220 20p. d) {0.5 marks) What was the equilibrium price of a ride in 199 5? H e) (0.5 marks) What was the profit per ride in 1995, neglecting any costs associated with acquiring a taxi cab license? 0 f) (0.5 marks) What was the prot pertaxi cab license per day? 0 g) {0.5 marks) If the taxi operated every day of a 365-day year, what was the prot per taxi cab license per year? '0 m :l. h) (1 mark) Supposethatthe commission decided in 1995to issue enough new licenses to reduce taxi cab price per ride to 818. How many more licenses would this take? 0 i) {0.5 marks) Assuming that demand in Ham Harbour is not going to grow any more, how much would a taxi cab license be worth at this new fare? U