Question

A drug interdiction program that successfully reduces the supply of illegal drugs in the United States likely will

a. raise the price, increase the quantity, decrease total revenues, and increase crime.
b. lower the price, reduce the quantity, increase total revenues, and increase crime.
c. lower the price, increase the quantity, decrease total revenues, and increase crime.
d. raise the price, reduce the quantity, increase total revenues, and increase crime.

Answer 1

The answer is: D) raise the price, reduce the quantity, increase total revenues, and increase crime.

Step-by-step explanation:

According to the law of supply and demand, when the supply of any given product is artificially lowered, the supply curve will shift:

• this will cause the price of that product to increase
• the profit margin of the suppliers will increase, increasing total revenue
• since illegal drugs would increase in crime, we can expect an increase in the crime rate on drug related crimes (e.g. addicts robbing).