Question

Suppose the government is concerned about firms in the united states importing illegal caviar. as a result, the government increases border patrols to catch illegal shipments. u. s. customs agents perform dna testing on the caviar to determine if it comes from endangered species of fish. if so, the government destroys the caviar.
what would we expect to observe in the caviar market?
a. equilibrium prices and quantities will increase.
b. equilibrium prices will increase by more if the demand for caviar is elastic than if demand is inelastic.
c. total revenues to caviar firms will increase if the demand for caviar is inelastic.
d. all of the above are correct.

Answer 1

Answer:

c. total revenues to caviar firms will increase if the demand for caviar is inelastic. 

Explanation:

If there is increased restrictions on the import of caviar, the quantity supplied would fall and price would increase.

If demand is inelastic, the increase in price would lead to an increase in total revenue because the quantity demanded would fall less than the increase in price.

I hope my answer helps you