Given this information please answer the questions. The industry for taxi services in most cities exhibits the following characteristics: The city has a limited number of taxi “medallions;” if you do not own a medallion from the city, you cannot operate your vehicle as a taxi service (i.e., you could not charge someone to drive them somewhere). You can buy a medallion from the city at an auction. The medallion allows you to operate a taxi, not simply to just drive one. Medallion owners often lease their medallions to drivers in shifts and charge the drivers a leasing fee. Taxi fares are usually set by a local city regulatory agency that oversees the industry. Taxi companies hire drivers (whose skills are generally easily transferrable to other firms, occupations, or industries), and also have expenses that are specific to the taxi industry (gasoline for the cabs, insurance requirements that differ from private vehicle insurance, driver training costs).

1. How much market power would an individual taxi driver have in setting the driver lease fee?

Select one: a. Significant power; there are few people able to drive taxis in a given city or for a given taxi company, so individual drivers have a lot of power in negotiating the lease fee with the company.

b. Moderate or mild power; there are a lot of people able to drive a taxi, and they usually work together with other potential drivers against the taxi company to insure that the lease fee is acceptably low.

c. Little to no power; there are not many taxi companies in a given city and many potential drivers, so the power of an individual driver over the lease fee is low.

2. How much market power would an individual taxi driver have in setting the taxi fare?

Select one: a. Moderate or mild power; drivers have to follow regulations but can usually set a few dollars above the required fare.

b. Little to no power; drivers must comply with city fare regulations.

c. Significant power; taxi fare regulations are usually not followed, and so individual drivers can set whatever fares they want.

3. How much market power would an individual taxi driver have in setting the wages of transferable drivers?

Select one: a. Moderate or mild power; since drivers can transfer their abilities to other companies, an individual driver has quite a bit of power.

b. Significant power; an individual driver would have a lot of power in setting his or her own wage.

c. Little to no power. There are a lot of potential taxi drivers and a few taxi companies, so an individual taxi driver has low power in setting his or her own wage.

4. How much market power would an individual taxi driver have in setting the price of nontransferable expenses (gas, insurance, training)?

Select one: a. Little to no power. Individual taxi drivers have little ability to control these nontransferable prices.

b. Significant power. An individual taxi driver can negotiate favorable prices on gas, insurance costs, and training fees.

c. Moderate or mild power. An individual driver must abide by company policy, but the company can often negotiate very favorable terms with gasoline companies, insurance companies, etc.

5. Compare the market power of taxi companies today versus twenty years ago in terms of their ability to earn revenue/profit from customers:

Select one: a. Taxi companies today have about equal power to what they had twenty years ago. The "consumption" of taxi services hasn't changed over this time period; customers still travel on the same roads. Since they are buying a very similar product now vs. then, their power hasn't significantly changed.

b. Taxi companies today have much less market power over revenues because of the wider array of consumer substitutes available (Uber, Lyft, etc.).

c. Taxi companies today have much more market power than they did twenty years ago. With medallion prices in the hundreds of thousands of dollars, an individual taxi company can charge much higher fares now than they could in the past.