If the penalty on sellers of an illegal good is less than the penalty on buyers of an illegal good,then supply of the good will ________ by ________ demand and the price of the good will ________.
A)decrease;more than;rise
B)decrease;less than;rise
C)decrease;less than;fall
D)decrease;more than;fall
E)increase;less than;rise

Question

Quizplus · Accepted Answer

When the penalty on sellers is less than the penalty on buyers, sellers may still be willing to supply the illegal good at a lower price even if they face some risk of punishment. However, buyers will face a greater risk and as a result, their demand for the good will decrease. This will cause the supply of the good to decrease and the price of the good to fall. Therefore, option C is the correct choice.

If the Penalty on Sellers of an Illegal Good Is