1) The document describes a Markov chain model of taxi rides in a city divided into three regions. Transition probabilities are provided for taxis moving between regions after each fare pickup and drop off. 2) A Markov chain is a stochastic process where the probability of transitioning between states depends only on the current state, not on prior states. This taxi problem exhibits the Markov property. 3) Matrix multiplication can be used to calculate the probability of a taxi being in a given region after multiple fares by raising the transition matrix to successive powers.