Q: Economists love to analyze markets for goods that are illegal (e.g., drugs, prostitution, etc.). One study showed that the own-price elasticity of the demand for powder cocaine (in absolute value) is 1.2, while the comparable elasticity for marijuana is 0.6. You have probably observed that the federal and state governments punish cocaine suppliers and dealers more severely than they punish marijuana dealers. Give TWO possible (if unlikely) explanations that relate back to demand analysis for this difference in policy.
Introduction to Political Economy: Microeconomics- Charles Moul
Textbooks; Mankiw's Principles of Microeconomics and Landsburg's The Armchair Economist
Course rating: (4 out 10 stars)
*Answer to the above question here.