Describe economic efficiency

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You are a member of the Metropolitan Taxi Commission, which sets taxi fares for your city. You have been told that long lines of taxis form at the airport during off peak hours. At peak hours, on the other hand, few taxis are available and long lines of passengers waiting for cabs. It is proposed that taxi fares from the airport to downtown be cut by 10 percent during off peak hours and increased by 10 percent during peak hours. How do you think these changes would affect the queuing patterns of taxis and passengers? Do you think the proposal is a good one from the passengers' point of view? From the cabbies' point of view? From the standpoint of economic efficiency? What do think if the taxi commission stopped setting fares altogether and allowed passengers and drivers to negotiate any price they wanted.

Reference no: EM13177348

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