In the Absence of Government Interference, There Is a Constant

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 .30 and the fine if a shipper is caught is $35 per ounce, then the equilibrium price of marijuana per ounce is

A) $22.14.
B) $40.
C) $3.50.
D) $15.50.
E) $6.50.

Correct Answer:

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