Question

If the government tightens up on drug dealers and raises the costs of dealing illegal drugs, then the drug addicts' dollar expenditures to feed their addiction will tend to: A) Decrease because their demand is price-Inelastic B) Increase because their demand is price-elastic C) Decrease because their demand is price-elastic D) Increase because their demand is price-Inelastic

Answer 1

Answer:

D

Explanation:

I'm sure the question was geared toward teaching you the difference between elastic and inelastic.

If your demand for a product does not change even if the price goes up, then the demand is considered to be inelastic.

However, the question posed to get this teaching point across made the answer almost impossible.  A drug addict's demand can drastically change from day to day depending on how readily that person can get hold of the money needed.  One day money may not be a problem so the expenditure will increase because their demand is price-inelastic.  The very next day the person may not be able to find any money at all.  Therefore, the expenditure will decrease because their demand is price-elastic