What is the economic reasoning behind the proposal to legalize drugs?
A. Legal drugs will greatly increase the supply, which will reduce the price Americans pay to foreign producers of the drugs.
B. All forms of government restrictions on behavior are immoral and ought to be removed.
C. Legal drugs will be much cheaper than illegal drugs, which will reduce incentive for crime to obtain money for drugs and to protect drug “businesses.”
D. Legal drugs will be more expensive than illegal drugs, and the market system will encourage more production, thus lowering the price.
E. Dealing with supply is always easier than dealing with demand, and legalization accomplishes that.
Answer: C
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The insight that patterns of trade are primarily determined by international differences in labor productivity was first proposed by
A) Adam Smith. B) David Hume. C) David Ricardo. D) Eli Heckscher. E) Lerner and Samuelson.