Which of the following statements is TRUE? I. The War on Drugs has increased revenues in the illegal drug industry. II. The War Drugs has increased the costs of selling drugs, causing a decrease in the supply of drugs. III. The War on Drugs has caused the price of drugs to increase. IV. The quantity demanded of illicit drugs is elastic.
A) II, III and IV only
B) II only
C) I, II, and III only
D) I, II, III, and IV

Question

Quizplus · Accepted Answer

Statement I is true as the War on Drugs has led to an increase in profits for drug traffickers as the costs to produce and distribute drugs have increased. 
Statement II is true as the War on Drugs has made it more difficult and expensive for drug dealers to operate, leading to a decreased supply of drugs. 
Statement III is true as the decreased supply of drugs due to the War on Drugs has caused the price to increase. 
Statement IV is false as the quantity demanded of illicit drugs is generally considered to be inelastic, meaning that changes in price have little effect on demand.

Which of the Following Statements Is TRUE? I