Suppose that prohibition causes the price of marijuana to increase from $5.00 per ounce to $40.00 per ounce. Which of the following is most likely responsible for this increase?
A) Prohibition causes a decrease in demand for marijuana.
B) As a result of prohibition, the purity of the drug bought by consumers is questionable.
C) Prohibition causes a decrease in supply due to the increased risk associated with selling the drug.
D) Prohibition will probably cause the sale of marijuana to take place in more competitive markets as numerous dealers will emerge to take advantage of the profits that can be made through illegal sales.
Correct Answer:
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