Suppose the cost of breaking the law is imposed on the buyers of an illegal good.This action will have its biggest impact on quantity if the demand for the good is
A)inelastic or the supply is inelastic.
B)elastic or the supply is elastic.
C)elastic or the supply is inelastic.
D)inelastic or the supply is elastic.
E)perfectly inelastic.

Question

Quizplus · Accepted Answer

When demand or supply is elastic, a change in price due to the cost of breaking the law will lead to a significant change in quantity demanded or supplied, thus having a bigger impact on quantity.

Suppose the Cost of Breaking the Law Is Imposed on the Buyers