Question

1. Suppose that for the United States, (%Δ Gun Murder Rate)/(%Δ Gun OwnerShip Rate)= .009

1a. If gun control legislation were able to reduce gun ownership by 99 percent, how exactly would society benefit?

1b. Based upon your answer in 1a, What can you conclude about the likely efficacy of gun control legislation in the United States?

2. Refer back to#1, suppose the demand for guns is QG D = 500 - .45P and the supply of guns is QG S = - 100 + .55P.

2a. How many guns would be affected by a complete ban on their sale?

2b. In a black market for guns, what type of quota rent would illegal dealers realize? What are the implications of Gun control legislation for incentivizing black markets in guns?

Answer 1

1a. %change in gun murder rate/% change in gun ownership rate= .009

If the ownership rate is reduced by 99 percent, the percentage change in the gun murder rate will be 99%*.009 which is .891. The society benefits in this case due to decline in gun ownership is in terms of crime reduced. So with this legislation, the society's gun crime would reduce by .891%.

1b. The gun control legislation of reducing ownership by 99% would not have a substantial change in the crime rate. As the results show that the gun crime or murder would only reduce by .891% which is even less than 1%. We can also say that the owning a gun for whatever purpose does not actually have a much impact on the gun crime in the US.

2.by equating demand and supply equal to each other, we can find the available guns in the economy. So the number of guns by equating demand and supply is 230 units. It must be noted that since units are not given of the guns, so we would assume that its only 230 guns.

2a. By a complete ban on the sale, 230 guns would go waste.

2b. The ban on the sale of guns would incentivize the suppliers in the black market. With the consistent demand, the profits would go up for the sellers in the black market. The amount which they now are earning over what they were previously earning would be their rent.