Estimated the price elasticity of demand for illegal drug
Course:- Business Economics
Reference No.:- EM13891937

Assignment Help
Assignment Help >> Business Economics

Microeconomics Ch-6 Web Activity 1

A Rand Corporation study of cocaine estimated the price elasticity of demand for this illegal drug.

A) Given the price elasticity of demand estimate provided in this report, is the demand for cocaine considered to be elastic, inelastic or unit elastic?

B) Using the list of determinants of elasticity found in the text, what is the most likely explanation for the elasticity estimate in the Rand Corporation study?

C) Draw a demand curve for cocaine that demonstrates the elasticity estimate you found for part a.

D) How does the measured elasticity affect the policies recommended in the report?

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Business Economics) Materials
The story of entitlements such as health care and welfare payments to the elderly in the US is pretty ----. This is partly because these payments form---part of the government
In response to problems in financial markets and a slowing economy, the FOMC began lowering its target for the federal funds rate from 5.25 percent in September 2007. Over the
Using our best data-based guesses about real-world elasticity, the demand for loanable funds curve is probably rather ______________ and the effects of crowding out are likely
Identify the various actors of intergovernmental relations involved in the case. In general, what does this case tell you about the complexity of IGR in this country and the w
Which is more economical, a plant with a payroll of $400 a week, with $100 of overhead, and with an output of 100 units per week, or a plant with a payroll of $80,000 a week,
Assume that you borrow $15,000 for five years (annual payments) at a market rate of 5%. Assuming that inflation is 3.5%, what would the equivalent equal annual payment be in c
How does a tax affect an individual’s decision? Consider the case of an individual who consumes two goods: bread and tortillas, both of which are initially free. Also, assume
The Pizza Company is considering entering the marketplace in your community. Use the information from "The Pizza Company Data" worksheet, located in Week 3 of your course shel