In Problem 13, in the absence of government interference, there is a constant marginal cost of $5 per ounce for growing marijuana and delivering it to buyers. If the probability that any shipment of marijuana seized is .50 and the fine if a shipper caught is $40 per ounce, then the equilibrium price of marijuana per ounce is
A) $50.
B) $2.50.
C) $25.
D) $45.
E) $7.50.
Correct Answer:
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