If the same fine is imposed on buyers and sellers of an illegal good so that the cost of breaking the law is the same for both, then
A) there is more government revenue collected than with an excise tax on the good.
B) there is no deadweight loss in this market because the extra producer surplus will exactly offset the lost consumer surplus.
C) the supply and demand curves both shift leftward by equal amounts.
D) the equilibrium price of the good definitely increases.

Question

Quizplus · Accepted Answer

When both buyers and sellers face the same fine, the cost of participating in the market increases for both, causing both the supply and demand curves to shift leftward by equal amounts.

If the Same Fine Is Imposed on Buyers and Sellers