Using the concept of elasticity, show that a drug enforcement policy aimed at getting rid of heroin suppliers may not be very effective in reducing heroin consumption
A policy that targets suppliers will shift the supply curve to the left, which will raise price. Because the
demand for heroin is likely to be very inelastic, the price will rise; the market quantity will only fall
slightly; and total revenues to suppliers who remain in the market will rise.
You might also like to view...
Explain how the invisible hand delivers an efficient market outcome
What will be an ideal response?
If the law of increasing opportunity costs is operable, and currently the opportunity cost of producing the 1,000th unit of good X is 0.5Y, then the opportunity cost of producing the 2,001st unit of good is X is most likely to be
A) less than 0.5Y. B) more than 0.5Y but less than 2Y. C) more than 0.5Y D) less than 0.5Y but more than zero. E) none of the above