Question

Drug law enforcers can concentrate their efforts on reducing supply or demand,
removing suppliers or removing demanders.
a. Assuming that your goal is to raise the price of drugs to a prohibitive level,
should you pursue suppliers or users? What does your answer assume about
elasticities of demand and supply?
b. If instead you want simply to reduce consumption and are uninterested in what
happens to price, under what assumptions about elasticities should you target
users rather than sellers?

Please justify with relevant economic concepts.

Answer 1

a) In this case, I definitely use a supply-side law enforcement intervention. For this I find out the illegal drug markets and abolish their productions by implementing quality certification and available legal mechanisms to guard against fraud. Shortage of supply of drugs leads to higher prices. As per Law of Demand, if price rises the demand will decreases. Therefore, the price elasticity of demand is inelastic ie P. eD<1. A change in price causes little changes in supply, then supplies are considered inelastic ie P. eS<1.

b) In this case, I definitely go back to the demanders. Find them from the society by using adequate laws, antidrug media campaign, treatment programme, self control measures or counselling them if needs. Picket all the small shops dealing with drugs. Protect the consumers from the consumption of drugs. Therefore, the demand for drugs become reduces and the price also rises. The elasticity of demand is elastic means percentage change in quantity demanded is less than percentage change in price of drugs. P. eD>1.The elasticity of supply is elastic also. P. eS>1