Government lifts ban on recreational drugs

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Question

The government lifts a ban on recreational drugs, increasing the demand for them. At the same time, now that the drugs are legal, new shops begin to pop up, increasing the availability of recreational drugs. How will the equilibrium price and quantity sold of recreational drugs adjust in response to these changes? The quantity sold will increase, and the impact on price cannot be determined, The quantity sold will increase, and the price paid by buyers will decrease, The quantity sold cannot be determined, and the price paid by buyers will increase, or The quantity sold cannot be determined, and the impact on price cannot be determined.

Reference no: EM133637252

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