In the Absence of Government Interference, There Is a Constant

question 4

Multiple Choice

In the absence of government interference, there is a constant marginal cost of $6 per ounce for growing marijuana and delivering it to buyers.Suppose that government authorities seize shipments whenever they find them and resell the marijuana that they seize on the open market.The probability that any shipment of marijuana is seized is .50.If a shipment is seized, there is no other punishment besides loss of the marijuana that is seized.The effect of the government action is to

• A)leave prices unchanged.
• B)raise the equilibrium price by $6.
• C)lower the equilibrium price by $3.
• D)raise the equilibrium price by $12.
• E)raise the equilibrium price by $3.

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Definitions:

Ivan IV

Also known as Ivan the Terrible, the first tsar of all Russia (1547-1584), known for his tyrannical rule, territorial expansion, and establishment of the Tsardom of Russia.

Muscovy

A historical region centered around Moscow, forming the core of the Russian state from the late medieval period until the early modern era.

Serfdom

Serfdom was a form of agricultural labor prevalent in medieval Europe, where serfs were bound to the land and owned by the landowner, obligated to provide labor in return for protection and rights to cultivate certain fields.

Absolutism

A political doctrine and practice where a single ruler holds supreme authoritative power, not restricted by any laws or opposition.