Estimated the price elasticity of demand for illegal drug

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Reference no: EM13891937

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?

Reference no: EM13891937

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