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Chapter 4: Q. 4.8 (page 93)

The consequences of decriminalizing illegal drugs

have long been debated.Some claim that legal

ization will lower the price of these drugs and

reduce related crime and that more people will

use these drugs.Suppose some of these drugs are

legalized so that anyone may sell them and use

them.Now consider the two claims-that price

will fall and quantity demanded will increase.

Based on positive economic analysis,are these

claims sound?

Short Answer

Expert verified

Yes.

Step by step solution

01

Step1. Given information

The government has legalized the use of drugs.

02

Step2. Explanation

It is no wonder that despite criminalizing the use of drugs, it continues to be bought and sold in the black market. This has increased the prices, and hence only a few can afford. This keeps the demand low.

When legalization of drugs take place, there won't be any additional costs associated with having to hide them, etc. This shall reduce the price. As the price falls, more people will be able to afford and demand shall rise.

Hence, the claims are correct.

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