If the penalty on sellers of an illegal good is less than the penalty on buyers of an illegal good, then supply of the good will ________ by ________ demand and the price of the good will ________.
A) increase; more than; increase
B) decrease; more than; decrease
C) decrease; less than; decrease
D) decrease; the same amount as; remain the same

Question

Quizplus · Accepted Answer

When the penalty on sellers is less than on buyers, the supply decreases less than the demand because sellers are less deterred than buyers. This results in a decrease in the price of the good.

If the Penalty on Sellers of an Illegal Good Is