Under Which of the Following Conditions Would the Interdiction of Illegal

question 42

Multiple Choice

Under which of the following conditions would the interdiction of illegal drugs result in a decrease in the quantity of drugs sold and in a decrease in total spending on illegal drugs by drug users?

• A)The interdiction has the effect of shifting the demand curve for illegal drugs to the right.
• B)The price elasticity of demand for illegal drugs is 1.3.
• C)The price elasticity of supply for illegal drugs is 0.8.
• D)As a result of the interdiction,the price of illegal drugs increases by 20 percent and the quantity of illegal drugs sold decreases by 16 percent.

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Definitions:

Short-Run Aggregate Supply

The total production of goods and services available in an economy at different price levels in the short term, often influenced by temporary factors.

Expansionary Gap

A situation in macroeconomics when the output of an economy exceeds the potential output level, typically leading to inflationary pressures.

Recessionary Gap

A situation where the real GDP is lower than the potential GDP at full employment, indicating underutilized resources in an economy.

Short-Run Aggregate Supply Curve

A graphical representation that shows the relationship between the total production of goods and services at different price levels in the short term.