What Is the Economic Reasoning Behind the Proposal to Legalize

question 108

Multiple Choice

What is the economic reasoning behind the proposal to legalize drugs?

• A) Legal drugs will greatly increase the supply, which will reduce the price Americans pay to foreign producers of the drugs.
• B) All forms of government restrictions on behavior are immoral and ought to be removed.
• C) Legal drugs will be much cheaper than illegal drugs, which will reduce incentive for crime to obtain money for drugs and to protect drug "businesses."
• D) Legal drugs will be more expensive than illegal drugs, and the market system will encourage more production, thus lowering the price.
• E) Dealing with supply is always easier than dealing with demand, and legalization accomplishes that.

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Definitions:

Current Liabilities

Obligations that a company needs to pay within a year.

Net Working Capital

The gap between a firm's present assets and its current obligations, signalling its short-term economic condition.

Operating Activities

Business actions directly related to the production, selling, and delivery of a company's goods and services, reflected in its cash flow.

Cash Flow

The movement of funds into and out of a business or project, critical for maintaining operations and investment activities.