Final answer:
The taxicab industry in large cities would not be subject to significant economies of scale due to the nature of the business. Adding more taxis to a fleet may not result in substantial cost reductions.
Step-by-step explanation:
The taxicab industry in large cities would not be subject to significant economies of scale.
This is because the nature of the taxi business relies on providing personalized transportation services to individual passengers. Each trip is unique and requires a separate vehicle and driver, which limits the potential for cost savings through economies of scale.
For example, if a taxi company operates a fleet of 100 taxis, adding more taxis to the fleet may not result in significant cost reductions. Each vehicle requires maintenance, fuel, and a driver, so the cost of running additional taxis may outweigh any potential benefits of scale.
In contrast, industries like manufacturing or retail can achieve economies of scale by producing or selling a large volume of products, which allows for cost savings in areas like production, purchasing, and distribution.