Suppose that the supply and demand for taxi rides is given by Figure 4-7 but the quota is set at 6 million rides instead of 8 million. Find the following and indicate them on Figure 4-7.

a. The price of a ride

b. The quota rent

c. Suppose the quota limit on taxi rides is increased to 9 million. What happens to the quota rent?

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Fare (per ride) $7.00 6.50 6.00 5.50 5.00 4.50 4.00 3.50 3.00 0 6 D Fare (per ride) $7.00 6.50 6.00 5.50 5.00 4.50 4.00 3.50 3.00 Quantity of rides (millions per year) Quantity Quantity demanded supplied 14 67690HZ3H 8 10 11 12 13 14 MZHD9876 13. 12 11 7 8 9 10 11 12 13 14 Quantity of rides (millions per year) FIGURE 4-7 The Market for Taxi Rides in the Absence of Government Controls Without government intervention, the market reaches equilibrium with 10 million rides taken per year at a fare of $5 per ride. 10 Krugman/Wells, Economics, 6e, 2021 Worth Publishers