If penalties for trading illegal drugs are instituted on both buyers and sellers, the
A) quantity might increase or decrease but the price will rise.
B) price might rise or fall, but the quantity will decrease.
C) price and the quantity will both decrease.
D) price and the quantity will both increase.

Question

Quizplus · Accepted Answer

Penalties on both buyers and sellers decrease demand and supply, leading to a decrease in quantity. The price effect is uncertain as it depends on the relative shifts in demand and supply.

If Penalties for Trading Illegal Drugs Are Instituted on Both