Friday, December 9, 2011

Supply-Demand Changes 12/5

1. Illegality of drugs encourages:

  • Less moral people to enter the market
  • Stronger drugs
  • Need for enforcement, which takes time and money
2. Taxes are neither a cost nor a benefit, since they only shift money around; however they prevent potential transactions, called the dead weight loss. This is where they hurt the economy.

3. Placing a tax on sellers is essentially taxing buyers; can't just isolate one side of the market for taxation without affecting other side

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