For a previously legal good, criminalization will cause

Question

Quizplus · Accepted Answer

Criminalization of a previously legal good creates fear and uncertainty among producers, making them less willing to supply the good. This leads to a decrease in the elasticity of supply, which means that producers are less able to respond to changes in price. As a result, criminalization generally results in a reduction in the overall supply of the good. Demand, on the other hand, may or may not change (depending on factors such as social norms, availability of substitute goods, etc.) but it is unlikely to increase because of the legal risk associated with purchasing a criminalized product. Price may also fall, but this is not unambiguously true and depends on the relative magnitudes of changes in demand and supply. Therefore, option C is the most appropriate answer.

For a Previously Legal Good, Criminalization Will Cause