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Wild American Ginseng Roots Can Be Sold Legally If They

question 22

Essay

Wild American ginseng roots can be sold legally if they are harvested from plants over 5 years old in appropriate places during a designated season. Poachers of American ginseng break these rules and threaten the species' existence. Possible policies to address the problem include:
A) a program that increases the supply of legal ginseng
B) a complete ban on ginseng production
C) a campaign to discourage ginseng purchases
The graph below shows the illegal supply, the total (illegal plus legal) supply, and the demand for wild American ginseng. Assume that none of the policies affect the illegal supply curve.
How many thousands of pounds of illegal ginseng will be supplied per year if
a) none of the policies is implemented. _____
b) only plan (A) is implemented, and it increases the legal supply by 2 thousand pounds per year at each price but has no effect on the demand curve. _____
c) only plan (B) is implemented, which eliminates the legal supply of ginseng but has no effect on the demand curve. _____
Suppose only plan (C) is implemented. Draw the new demand curve such that the resulting quantity of illegal ginseng supplied is 2 thousand pounds per year.

Definitions:

Carrying Values

The amount at which an asset is recognized on the balance sheet after deducting any accumulated depreciation and impairment charges.

Deferred Tax Account

An account on a company’s balance sheet that is a provision for income taxes that have been accrued but are not yet due.

Unrealized Profits

Profits that have been earned but not yet realized through a transaction, such as an increase in value of an investment that has not been sold yet.

Inventory

the totality of goods and materials held by a company for the purpose of resale, manufacturing, or repair.