1. Assume that if drugs (like marijuana, cocaine and heroin) were legalized, the supply curve would shift down and to the right because the business of drugs would become less risky and less expensive. a. Would you expect the demand curve to shift if drugs were legalized? Why or why not? b. Given the supply shift and your answer to (a), what would happen to the drug price and quantity consumed if legalized? Use a graph to illustrate your answer. c. Although it is difficult to empirically test, many people believe that the demand for drugs is price inelastic for addicted users and price elastic for young or occasional, recreational users. Show graphically what would happen to the total revenue of drug sellers whose customers are addicted and of sellers whose customers are casual users. Assume that drug sellers can be separated by their customer type. Also assume that the demand curve does not shift when drugs are legalized.
1. Assume that if drugs (like marijuana, cocaine and heroin) were legalized, the supply curve would shift down and to the right because the business of drugs would become less risky and less expensive.
a. Would you expect the
b. Given the supply shift and your answer to (a), what would happen to the drug price and quantity consumed if legalized? Use a graph to illustrate your answer.
c. Although it is difficult to empirically test, many people believe that the
demand for drugs is price inelastic for addicted users and price elastic for
young or occasional, recreational users. Show graphically what would
happen to the total revenue of drug sellers whose customers are addicted and of sellers whose customers are casual users. Assume that drug sellers can be separated by their customer type. Also assume that the demand curve does not shift when drugs are legalized.
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