A "war on drugs" is waged, and, as a result, a larger quantity of drugs flowing into the United States is seized and more drug traffickers are arrested. If demand for drugs is inelastic, one would expect the total expenditure on drugs to:
A)decrease.
B)increase.
C)stay constant.
D)There is not enough information available to make a determination.

Question

A "war on drugs" is waged, and, as a result, a larger quantity of drugs flowing into the United States is seized and more drug traffickers are arrested. If demand for drugs is inelastic, one would expect the total expenditure on drugs to:
A)​decrease.
B)​increase.
C)​stay constant.
D)​There is not enough information available to make a determination.

Quizplus · Accepted Answer

If demand for drugs is inelastic, then even if the supply is reduced through the efforts of the "war on drugs," the demand for drugs will remain relatively constant. This means that drug traffickers can charge higher prices for their products and still make sales. Therefore, even though more drugs are being seized and more traffickers are being arrested, the total expenditure on drugs is likely to increase because the prices of drugs may increase due to decreased supply.

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