Question

Question#6.

Question 6 Not yet answered If ride-sharing companies begin competing with taxi cab companies, which of the following will occur? Assume that taxicab licenses have a positive price, and the entry of ride share companies leads to a shift of the demand curve of taxicab rides to the left. Points out of 1.00 P Flag question Select one: a. Economic rent for taxi cab licenses will increase Yes 5:37 PM Proctoru b. The value of taxi cab licenses will decrease c. The per mile price of taxi cab rides will be lower than for trips by ride-sharing companies d. Taxi drivers will earn more than before You may proceed thanks 5:37 PM Proctoru e. None of the above Type here and press Enter to send Question 7 Not yet answered Points out of 1.00 Bill is currently consuming 6 pens and 10 pencils. If the price of pens increases and we assume that pers are a Giffen good, which of the following could be Bill's new consumption bundle of pens and pencils? You can assume that each of the answers below is affordable. P Flag question Select one: a3 pens and 5 pencils MacBook Air

Answer 1

Question 6

It has been stated that the entry of ride sharing companies has resulted in the leftward shift of the demand curve of the taxi cab rides.

The leftward shift indicates the decrease in demand.

So,

Given the supply of taxi can rides, this decrease in demand for taxi can rides will result in a decrease in the equilibrium price and quantity of taxi cab rides.

To operate a taxi cab, license is needed.

The value of license depends on the price and quantity of taxi can rides.

Higher the price and quantity of taxi cab rides, higher would be the value of license and vice-versa.

So,

This decrease in the price and quantity of taxi cab rides due to decrease in demand will result in the decrease in the value of taxi cab licenses as well.

Hence, the correct answer is the option (b).