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On 11 September, 2012, Delhi government ...

On 11 September, 2012, Delhi government enforced a complete ban on the manufacture, sale and storage of "Gutka" in the national capital. How will it affect the market demand and supply of gutka?

Text Solution

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The ban on gutka will have the following effects:
`**` The ban will decrease its supply as firms producing gutka will shift their factors of production in the production of other related goods.
`**` The ban will also lead to decrease in demand for gutka.
In this way, both the demand and supply of gutka will reduce.
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