Suppose penalties are imposed on both buyers and sellers of marijuana, but the cost of breaking the law to sellers is greater than that to buyers. This measure will _______ the equilibrium price of marijuana and _______ the equilibrium quantity of marijuana sold.

Question

Quizplus · Accepted Answer

When penalties are imposed on both buyers and sellers, but the cost to sellers is greater, it discourages more sellers than buyers. This reduces supply more than demand, leading to a higher equilibrium price and a lower equilibrium quantity sold.

Suppose Penalties Are Imposed on Both Buyers and Sellers of Marijuana