Suppose the Cost of Breaking the Law Is Imposed on the Sellers

question 112

Multiple Choice

Suppose the cost of breaking the law is imposed on the sellers of an illegal good.This action will have its biggest impact on quantity if the demand for the good is

• A)inelastic or the supply is inelastic.
• B)elastic or the supply is elastic.
• C)elastic or the supply is inelastic.
• D)inelastic or the supply is elastic.
• E)perfectly inelastic.

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Definitions:

Expected Standard Deviation

A statistical measure that quantifies the amount of variation or dispersion of a set of expected values, often used to quantify the risk associated with a particular asset or investment.

Probability Distribution

A mathematical function that describes the likelihood of obtaining the possible values that a random variable can assume.

Nominal Rate of Interest

The stated interest rate on a loan or financial asset, without adjustment for inflation or other factors.

Real Rate of Interest

The inflation-adjusted interest rate, which shows the actual cost of borrowing and the genuine return for lenders or investors.