ASSIGNMENT NO. 3.3

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.