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.

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Definitions:

Cocaine

A powerful stimulant drug derived from the leaves of the coca plant, often used recreationally and known for its potential for abuse and addiction.

Codeine

Codeine is an opiate used to treat pain, coughing, and diarrhea by acting on the central nervous system to relieve symptoms.

Morphine

A potent opiate analgesic medication derived from opium, used to relieve severe pain.

Cocaine

A powerful and addictive stimulant drug derived from coca plant leaves, which is illegal in many countries.