Refer to Figure 2-8. Suppose Vidalia is currently producing 120 ...

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Refer to Figure 2-8. Suppose Vidalia is currently producing 120 dozen roses per period. How many orchids is it also producing, assuming that resources are fully utilized?
 
  A) 20 dozen orchids B) 32 dozen orchids C) 44 dozen orchids D) 68 dozen orchids

Question 2

How does the imposition of a penalty for selling an illegal drug influence demand, supply, price, and the quantity of the drug consumed?
 
  What will be an ideal response?

[Jadwiga9]

Answer to Question 1

B

Answer to Question 2

If the penalty is levied on the seller, the penalty is added to the minimum price required for supplying the good or service. The demand curve remains unchanged but the supply curve shifts leftward, so that the vertical distance between the initial supply curve and the supply curve with the penalty equals the dollar value of the penalty. In this case, the equilibrium price of the good rises and the equilibrium quantity decreases.

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Thank you

[Jadwiga9]

No problemo