-Suppose the government has declared beer to be an illegal substance and has imposed equal penalties on any person caught buying a beer and on any person caught selling a beer. Using the above figure, in which CBL is the cost of breaking the law, beer consumption is decreased by
A) 200 quarts.
B) 300 quarts.
C) 400 quarts.
D) 500 quarts.

Question

-Suppose the government has declared beer to be an illegal substance and has imposed equal penalties on any person caught buying a beer and on any person caught selling a beer. Using the above figure, in which CBL is the cost of breaking the law, beer consumption is decreased by
A) 200 quarts. 
B) 300 quarts. 
C) 400 quarts. 
D) 500 quarts.

Quizplus · Accepted Answer

The imposition of equal penalties on both buyers and sellers increases the cost of breaking the law (CBL), which shifts both the demand and supply curves leftward, leading to a decrease in beer consumption by 400 quarts.

-Suppose the Government Has Declared Beer to Be an Illegal