A "war on drugs" is waged, and, as a result, a large quantity of drugs flowing into the United States is seized and the drug traffickers are arrested. If the demand for drugs is inelastic, which of the following is true?
A)The total expenditure on drugs will decrease in the Unites States.
B)The total expenditure on drugs will increase in the Unites States.
C)The total expenditure on drugs will remain constant in the Unites States.
D)The quantity of drugs demanded in the Unites States changes proportionately to price changes.
E)The quantity of drugs demanded in the Unites States changes proportionally more than the price changes.

Question

Quizplus · Accepted Answer

When demand is inelastic, consumers are relatively unresponsive to price changes. Therefore, if the supply of drugs decreases due to seizures and arrests, causing prices to rise, the total expenditure on drugs is likely to increase because the decrease in quantity demanded will be proportionally less than the increase in price.

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