Question

Some policy makers have claimed that the U.S. government should purchase illegal drugs, such as
cocaine, to increase the price that drug users face and therefore reduce their consumption. Does this idea
have any merit? Illustrate this logic in a simple supply and demand framework. How does the elasticity of demand for illegal drugs relate to the efficacy of this policy? Are you more or less willing to favor this policy if you are told demand is inelastic?

Answer 1

Ans :- Some policy makers have claimed that the U.S. government should purchase illegal drugs,such as cocaine, to increase the price that drug users face and therefore reduce their consumption.