If penalties are imposed only on the buyers of illegal drugs, the equilibrium price of illegal drugs will ________ and the equilibrium quantity will ________.
A) rise; increase
B) rise; decrease
C) fall; increase
D) fall; decrease

Question

Quizplus · Accepted Answer

The correct answer is D.If penalties are imposed only on the buyers of illegal drugs, the equilibrium price of illegal drugs will fall and the equilibrium quantity will decrease. This is because the penalties will make it more costly for buyers to purchase illegal drugs, which will reduce the demand for illegal drugs. As a result, the equilibrium price of illegal drugs will fall and the equilibrium quantity will decrease.

If Penalties Are Imposed Only on the Buyers of Illegal