What is the lowest fine that will just deter the drug dealer

Reference no: EM131227290

Suppose that a drug dealer can earn $1,000 from selling drugs illegally and that the probability of apprehension is .25.

(a) Show that a penalty requiring drug dealers to surrender their profits in the event of conviction will fail to deter them.

(b) What is the lowest fine that will just deter the drug dealer?

Reference no: EM131227290

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