Which of the following is a CORRECT statement about markets for prohibited goods?
A) Penalizing sellers of an illegal good decreases supply and penalizing buyers decreases demand.
B) Penalizing either buyers or sellers of an illegal good decreases the quantity bought.
C) Taxing a good at a sufficiently high rate can achieve the same consumption level as prohibition.
D) All of the above are correct statements.

Question

Quizplus · Accepted Answer

Penalizing sellers decreases supply, penalizing buyers decreases demand, and both actions reduce the quantity bought. High taxes can mimic prohibition by reducing consumption.

Which of the Following Is a CORRECT Statement About Markets