In the Absence of Government Interference, There Is a Constant

question 47

Multiple Choice

In the absence of government interference, there is a constant marginal cost of $5 per ounce for growing marijuana and delivering it to buyers.If the probability that any shipment of marijuana is seized is .10 and the fine if a shipper is caught is $25 per ounce, then the equilibrium price of marijuana per ounce is

• A)$8.33.
• B)$7.50.
• C)$30.
• D)$4.50.
• E)$5.50.

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