4. Of what significance is the elasticity of demand for drugs in the debate about legalization of presently illegal substances?
The authors demonstrate how the elasticity of demand is crucial to understanding the effects of punishment on suppliers. Enforcement raises costs for suppliers, who must respond to the risk of imprisonment and other punishments. This cost is passed on to the consumer, which induces lower consumption when demand is relatively elastic. However, in the case of illegal goods like drugs -- where demand seems inelastic -- higher prices lead not to less use, but to an increase in total spending.
In the case of drugs, then, the authors argue that excise taxes and persuasive techniques -- such as advertising -- are far more effective uses of enforcement expenditures.
4. Of what significance is the elasticity of demand for drugs in the debate about legalization...
1. (0,5, or 10) Explain how the elasticity of demand for drugs (whether it is elastic or inelastic) is important in the debate about legalization of presently illegal substances?
1. The problem of illicit drugs continues to stimulate debate. Who mostly uses illicit drugs? Who abuses illicit drugs? Who is most at risk to become addictive? Referring to substance abuse strategies, what methods do you think are most effective in reducing the harm associated with illicit and illegal drugs? What affect has drug usage played in your life?
In 2004, Congress allocated over $20 billion to fight illegal drugs. About 60 percent of the funds was directed at reducing the supply of drugs through domestic law enforcement and interdiction. Some critics of this approach argue that supply-side approaches to reduce the drug supply actually helped drug producers. Demonstrate graphically the effect of supply-side measures on the market for illegal drugs. Explain how these measures affect drug producers. (Hint: Consider the elasticity of demand). Demonstrate the effect of demand-side...
Do you believe the elasticity of marijuana is inelastic and if legalized demand will not increase? Do you also believe that many of society's social ills associated with drugs will ease not only from marijuana being legalized, but also from the taxes garnered from its legalization used to assist people? Or do you believe the elasticity of marijuana is elastic and if legalized the demand for these will increase? Do you also believe that by legalizing marijuana will create addicts...
The following graph shows the market for hard drugs, such as heroin, cocaine etc. Calculate the price elasticity when price increases from $4 to $6. Is the demand price elastic? Suppose the government tries to solve the drug problems by reducing the supply. With the reduction of supply of hard drugs, will the percentage increase in price less than the percentage decrease in quantity? Will the revenue received by drug criminals increase? Besides changing the revenue received by drug criminals,...
What so the following elasticites tell you about the goods. A. Elasticity of demand for good X is 4. B. Cross-price elasticity of demand for good X and good Y is -2. C. Income elasticity of Demand for good X is 0.8.
What is the whole debate about Aggregate Demand creating Supply versus Aggregate Supply Creating Demand? Which view do you see in your everyday experience? Why does this debate continue? Thinking back to the business cycle discussion, how would Keynesian economists explain the performance of the economy during the last few years? Next, how would neoclassical economists explain the performance of the economy during the last few years? Which interpretation makes the most sense to you? Why? Robert Skidelsky is the...
Suppose you are a lobbyist fighting against the legalization of marijuana. Upon what would you base your argument/case? Why are some drugs illegal and others not? What characteristics or criteria do we use to determine if a drug's use is legitimate or illegitimate? What would you do to help solve the drug issue in the U.S.? Drug and alcohol abuse cost taxpayers more than $294 billion in preventable health care costs, extra law enforcement, auto crashes, crime and lost productivity....
Which of the following statements about the price elasticity of demand is correct? Demand is more elastic in the long run than it is in the short run. Demand is more elastic the smaller the percentage of the consumer's budget the item takes up. The absolute value of the elasticity of demand ranges from zero to one. The elasticity of demand for a good in general is equal to the elasticity of demand for a specific brand of the good
explain what you understand about Income elasticity of demand and give some examples.