In response to the increasing death of teenagers from illicit drug overdose, the government has introduced a new get tough on drugs policy in which it will target the importers and dealers of illicit drugs. There are two types of illicit drugs drug A and drug B. Drug A has an elastic demand in the relevant range. Drug B has an inelastic demand in the relevant range. Analyse the effect of the new drug policy in the market for both drugs. What would be the effect on total expenditure on each of the drugs? Are your answers consistent with economic theory? Use demand and supply diagram (s) to explain and illustrate your answer. Use a D-S diagram. With a policy targeting suppliers, the quantity supplied will be lower at every price supply will shift to the left (for both drugs). Drug A is elastic in the relevant range in the new equilibrium, quantity demanded will fall, and this fall will be proportionally larger than the price rise. Total expenditure would fall. Drug B is inelastic in the relevant range in the new equilibrium, quantity demanded will fall, and this fall will be proportionally smaller than the price rise. Total expenditure on Drug B will increase.