The authors characterize optimal enforcement in a setting in which individuals can select among various levels of some activity, all of which are monitored at the same rate but may be prosecuted and punished at varying rates. For less harmful acts, marginal expected penalties ought to fall short of marginal harms caused. Indeed, some range of very minor acts should be legalized. For more harmful acts, whether marginal expected penalties should fall short of or exceed marginal harms depends on the balance between monitoring and prosecution/punishment costs. The authors also explore how the optimal enforcement policy varies with changes in these costs. Copyright 1994 by University of Chicago Press.