A taxi driver picks up passengers at a city airport. he's a price taker and profit-maximizer. The regulated price for rides to downtown from the airport is $40. His costs are given by the following function:
TC = 100 + 20q + 0.1q2
Q being the quantity he produces
1) How many taxis will he provide? What are the profits?
2) Assume the city imposes a new requirement for a $100 per year taxi license fee for all drivers. Assume the regulated price remains fixed at $40. how many rides will the driver provide now and what are his profits?
3) Assume the the city requires all drivers to pay a $10 fee for each ride. With the price remaining fixed at 40, how many rides will he provide and what will the profits be?