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 relatively elastic, 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 relatively elastic, 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 relatively elastic, an increase in the price due to decreased supply (from the seizure of drugs and arrest of traffickers) would lead to decreased total expenditure on drugs. Thus, the "war on drugs" may lead to a decrease in the total expenditure on drugs.

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