Question

PROBLEM: Many economists believe that, due to the fact that the demand for addictive illegal drugs tends to be inelastic, the more vigorously that the government pursues the war on drugs, the greater will be the crime and other social problems associated with the use of those drugs. With the aid of a supply and demand diagram, write a short essay carefully explaining the logic behind this conclusion.

SOME COMMENTS ON THIS ASSIGNMENT: The key issue here is inelastic demand. When demand is inelastic, an increase in price tends to yield proportionally small decreases in the quantity demanded; while a decrease in price yields proportionally small increases in the quantity demanded.

As an example, consider the overall market for food. We all have to eat, so even if the price for food were to rise, chances are that as long as we can afford it, we would not reduce our overall food consumption all that much. On the other hand, when food becomes cheaper, we may not buy all that much more overall either. In truth, in the US today, more people are concerned with keeping their weight in check than with making sure that they have enough calories.

The implications of the inelastic nature of the overall demand for food has had a profound impact on farming in the US and around the world. As farming becomes more and more productive, with each worker in agriculture yielding more and more output, the need for agricultural labor has fallen dramatically. At the beginning of the 20th century almost two out of every five working Americans worked in agriculture. Today this number has fallen to less than one in fifty. At the same time, the total value of agricultural production represents an ever smaller portion of the total value of goods produced in the American economy. The reason is that as farming has become ever more efficient.

On the other hand, during famines, the price of food tends to rise astronomically, as everyone scrambles to feed themselves and their families.

Answer 1

Drug is addictive and illegal.so government wants to take vigorous actions against it.but as the it is addective so no individual addicted to drugs can't leave without it.he/she needs drugs at any cost otherwise the can be furious and could harm himself or others.now we can explain it with a diagramin thos fig we can measure price on the vertical axis and quantity on horizontal axis.now here SS is the supply curve for drug and DD is the demand curve for drug.and here Ld is the long run demand curve which is vertically straight line.it shows that inelastic demand with price.and the equilibrium occures at price P1 where the equilibrium quantity is q1 but if the price rises for some external causes then the quantity will not fall from tge level q1 as drug addicted people needs drug to live.now suppose government take vigorous actions against drug by punishing drug dealer and raid over the country and seize a major amount of drugs.that means if all the drug dealer are in prison so the supply chain will break and drugs are not easily available for addicted people.on the other hand as the supply has fall drastically but the demand is not fall then their is a huge increase in price due to excess demand or shortage of supply.and now it has higher risk to sell drugs so to compensate the higher risk seller can charge extra price.so the cost of purchasing drugs is much higher for individual so they have to curtail other consumptions.and many times he doesn't acquire all the money for puchasing drugs so then he have to earn it through illegal ways like robbery,murder and many more like this as he needs money desperately and can go any extent for drugs.so their will be total mess in the country.as crime rate is much higher than before and it is not socially accepted.and many individuals can commit suicide due to unavailability of drugs and many can go out of control are became threat for house members or neighbours.