00:01
The mayor of gotham city wants to be more popular by reducing the price of taxi rides.
00:09
And over on the left -hand side, we've got our demand and supply for taxi rides at different prices, and they're in millions of rides per year.
00:20
And so at first, we want to know where equilibrium would be.
00:25
And so we can see from our demand -and -supply schedule, but quantity -demand -suffly.
00:30
Quantity supplied are equal at 650.
00:33
And the graph on the right shows that beginning equilibrium, 650 per ride, and we'd have 11 million rides bought and sold every year.
00:46
If the mayor put a price ceiling at 550, then here's our price ceiling at 550.
00:56
And we can see that the quantity demanded is 13 million, but with the price ceiling at 550, the quantity supplied is only nine, so we have a shortage of 4 million.
01:14
And this would definitely hurt the taxi drivers because they're getting 550 instead of 650 per ride, and they're only willing to supply 9 million rides rather than at equilibrium, we were supplying 11 million.
01:33
In part c, the stock market crashes, and as a result, people in gotham city are poorer, and so because their income is decreased, they have a decrease in demand by 6 million rides at each price.
01:49
So i'm going to write the new demand schedule here...
