Chapter 9R, Problem 1CTQ

To determine

If the demand for illegal drugs is determined by them being illegal and the implications of illegal drugs for the government’s drug enforcement policy.

Explanation of Solution

In the case of illegal drugs, when people buy drugs regardless of price, then the demand is inelastic for drugs that can be illegal or legal. But if people do not buy drugs when the price increases, then the demand is elastic which changes with the price change.

Implications of illegal drugs for the government’s drug enforcement policy:

When people get addicted to drugs, then it becomes a necessity; therefore, without considering it deadly consequence of illegal drug use arises the need to control the supply and demand of illegal drugs through legalization or the government’s drug enforcement policy.

Allowing taxation and effective regulation can result in the reduction of drug-addicted people as an increase in supply would decrease the price of drugs. This, in turn, causes profits for the seller which prevents to get people from hooked on sellers’ drug samples and failing their other marketing techniques that influence people to use drugs.

People usually start using drugs at a young age and a large portion of their income is spent on the expenses of alcohol or tobacco. This makes the demand elastic at the initial stage but the demand gets fixed at a certain minimum quantity, which impacts the government’s drug enforcement policy.

Economics Concept Introduction

When a government prohibits the usage of a drug in the state, then this kind of drug is included in the category of illegal drug.