Igure

If demand ¡5 inelastic, then an increase in price raises total revenue in the drug market. That is, because drug interdiction raises the price of drugs proportionately more than it reduces drug use. it raises the total amount of money that drug users pay for drugs. Addicts who already had to steal to support their habits would have an even greater need for quick cash. Thus, drug interdiction could increase drug-related crime.

Because of this adverse effect of drug interdiction, some analysts argue for alternative approaches to the drug probkm. Rather than trying to reduce the supply of drugs, policymakers might try to reduce the demand by pursuing a policy of drug education. Successful drug education has Ihe effects shown in panel (b) of Figure The demand curve shifts to the left fnun D, to Dr As a result, the equilibrium quantity falls from Q, to Qy and Ihe equilibrium price falls from P, to Pr Total revenue, whkh is price limes quantity, also falls. Thus, in contrast to drug interdiction, drug education can reduce both drug use and drug-related crime.

Advocates of drug interdiction might argue that the long-run effects of this policy are different from the short-run effects because the elasticity of demand depends on the time horizon. The demand for drugs is probably inelastic over short periods because higher prices do not substantially affect drug use by established addicts- But demand may be more elastic over longer periods because higher prices would discourage experimentatk>n with drugs among the young and, over time, lead to fewer drug addicts. In this case, drug interdiction would increase drug-related crime in the short run while decreasing it in the long run.

QUICK QUIZ Hew might a drought that doitroyi half of »■ farm cropi be good for farmer»? If »uch a drought 1» good for farmer», why don't farmer» dettroy their own crop» In the absence of a drought?

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