Question: Some members of the city council in Washington DC recently
Some members of the city council in Washington, DC, recently proposed requiring every taxi to have a medallion, which is essentially a permit to drive a cab. Under the proposal, the number of medallions was fewer than the number of cabs currently on the streets. Using the model illustrated in Figure 6.4, show how this proposal would affect the price of taxi rides to consumers and the overall deadweight loss, if any.
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