If the Same Fine Is Imposed on Buyers and Sellers

question 93

Multiple Choice

If the same fine is imposed on buyers and sellers of an illegal good so that the cost of breaking the law is the same for both, then

• A) there is more government revenue collected than with an excise tax on the good.
• B) there is no deadweight loss in this market because the extra producer surplus will exactly offset the lost consumer surplus.
• C) the supply and demand curves both shift leftward by equal amounts.
• D) the equilibrium price of the good definitely increases.

---

Definitions:

Letter-of-credit Rights

Rights to payment under a letter of credit, which is a document from a bank guaranteeing that a seller will receive payment if certain conditions are met.

Economic Benefit

An economic benefit is a gain or advantage, usually measured in terms of money or value, received as a result of an action or transaction.

Statute of Frauds

A legal doctrine that requires certain types of contracts to be executed in writing and signed by the party to be charged.

Surety

A party that takes responsibility for another's performance of an undertaking, such as fulfilling the terms of a contract.