When interdiction efforts manage to stem the flow of illegal drugs into the United States, assuming no change in demand, the price of these substances rises.This price increase leads to more crime as addicts attempt to maintain their now more-expensive habits.Economists call this side-effect of the drug business
A)the illusion of rationality.
B)an externality.
C)the cost disease of personal services.
D)inflation.
E)unemployment.

Question

Quizplus · Accepted Answer

The side-effect described is an externality, which is an unintended consequence of an economic activity that affects someone not involved in the activity. In this case, the rise in drug prices affects not only drug users but also the broader society through increased crime.

When Interdiction Efforts Manage to Stem the Flow of Illegal