Suppose state governments,in an attempt to help save the family farm,issued licenses that allowed them to grow a heretofore-illegal substance.As a result,

Question

Quizplus · Accepted Answer

When the state governments issue licenses to grow a heretofore-illegal substance, it implies that the supply of the substance will increase. Since the demand for the substance would likely remain the same or increase slightly, the shift in supply would lead to a fall in equilibrium price, and an increase in equilibrium quantity. Therefore, the correct option is D, equilibrium price will fall, and equilibrium quantity will rise for the substance.

Suppose State Governments,in an Attempt to Help Save the Family