If Penalties Are Imposed Only on Buyers (But Not on Sellers)

question 13

Multiple Choice

If penalties are imposed only on buyers (but not on sellers) of marijuana, the equilibrium price of marijuana ________, and the equilibrium quantity of marijuana sold ________.

• A) rise; increase
• B) rise; decrease
• C) fall; increase
• D) fall; decrease

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Definitions:

Imperfectly Competitive

Referring to market structures that do not meet the conditions of a perfect competition, often characterized by a small number of sellers, product differentiation, or barriers to entry.

MP

Member of Parliament; an elected official to the national legislative body in many countries.

Haircuts

A reduction applied to the value of assets for purposes of calculating capital requirements, risk, or losses.

Productive

The efficiency at which an individual, company, or economy can convert input resources into useful output.