Question

Suppose the U.S. Drug Enforcement Agency steps up its efforts to control the illegal importation of cocaine into the United States. What is the likely effect on the market for illegal drugs in the United States?

Answer 1

Answer:

The Price of Cocaine would rise drastically

Explanation:

If U.S Drugs Enforcement Agency impose higher restrictions in an effort to control illegal import of cocaine into the United States, this would directly impact the market for illegal drugs in the following ways:

• Since more restrictions get imposed, the procurement cost of cocaine alongside the risk associated with it in the form of higher penalties and prosecution, both will rise.
• The supply of cocaine would shrink in the market.
• The above two outcomes would result into the procurers and peddlers demanding much greater price for the same quantity of cocaine so as to compensate for the higher risk assumed and higher procurement costs associated.

Thus, price of cocaine will rise drastically as an outcome of such a move.