Question: The answer is A. Why? 24.5 In Problem 24.13, in the absence of government interference, there is a constant marginal cost of $5 per ounce

The answer is A. Why?

24.5 In Problem 24.13, 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 .20 and the fine if a shipper is caught is $20 per ounce, then the equilibrium price of marijuana per ounce is (a) $11.25. (b ) $9. (c) $25. (d) $4. (e) $6

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