Suppose the government has declared beer to be an illegal ...

[danielfitts88]

Suppose the government has declared beer to be an illegal substance and has imposed equal penalties on any person caught buying a beer and on any person caught selling a beer.
 
  Using the above figure, in which CBL is the cost of breaking the law, what is the equilibrium price and quantity with this new law in effect? A) 5 per quart and 300 quarts of beer
  B) 3 per quart and 500 quarts of beer
  C) 3 per quart and 100 quarts of beer
  D) 1 per quart and 300 quarts of beer

Question 2

With respect to labor supply, the substitution effect means a
 
  A) person increases his or her hours of labor in response to a higher wage rate.
  B) person decreases his or her hours of labor in response to a higher wage rate.
  C) person substitutes high paying work for low paying work.
  D) firm substitutes capital for labor.

[owenfalvey]

Answer to Question 1

C

Answer to Question 2

A

[danielfitts88]

Gracias!

[AngeliqueG]

TYSM