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.
A) lower; increase
B) raise; increase
C) raise; decrease
D) not change; will decrease

Question

Quizplus · Accepted Answer

When penalties are imposed on both buyers and sellers, the supply curve shifts left more than the demand curve due to higher costs for sellers, raising the equilibrium price and decreasing the equilibrium quantity.

Suppose Penalties Are Imposed on Both Buyers and Sellers of Marijuana