Suppose That Prohibition Causes the Price of Marijuana to Increase

question 102

Multiple Choice

Suppose that prohibition causes the price of marijuana to increase from $5.00 per ounce to $40.00 per ounce. Which of the following is most likely responsible for this increase?

• A) Prohibition causes a decrease in demand for marijuana.
• B) As a result of prohibition, the purity of the drug bought by consumers is questionable.
• C) Prohibition causes a decrease in supply due to the increased risk associated with selling the drug.
• D) Prohibition will probably cause the sale of marijuana to take place in more competitive markets as numerous dealers will emerge to take advantage of the profits that can be made through illegal sales.

---

Definitions:

Perpetual Inventory System

A digital system for inventory management that immediately documents any inventory sale or purchase using electronic point-of-sale systems along with enterprise asset management software.

MasterCard and VISA

Major global payment networks and companies facilitating electronic funds transfers through branded credit, debit, and prepaid cards.

Service Fee

A charge for the provision of a service, often separate from the cost of goods sold.

FOB Destination

A shipping term indicating that the seller bears freight charges and retains ownership of goods in transit until they are delivered and accepted by the buyer.