A "war on drugs" is waged and, as a result, a larger quantity of drugs flowing into Canada is seized and more drug traffickers are arrested. If demand for drugs is inelastic, what effect would one expect this to have on the total expenditure on drugs?
A) It would be zero.
B) It would increase.
C) It would stay constant.
D) It would decrease.

Question

Quizplus · Accepted Answer

When demand is inelastic, consumers are less sensitive to price changes. Therefore, even if the supply decreases due to the war on drugs, leading to higher prices, total expenditure on drugs is likely to increase because consumers will still purchase drugs, albeit at higher prices.

A "War on Drugs" Is Waged And, as a Result