Suppose the U.S. Drug Enforcement Agency steps up its efforts to control the illegal importation of cocaine into the United States. What is the likely effect on the market for illegal drugs in the United States?
a. The price of cocaine and the quantity imported will both increase.
b. The price of cocaine is likely increase and the quantity entering the country decrease.
c. The price of marijuana, a cocaine substitute grown domestically, will fall.
d. The policy will have the least impact on those individuals whose demand for drugs is elastic.
e. Demand for drugs is highly inelastic and these policies have little or no effect on consumption.
Question 2
In Fisher's model of the determination of the rate of return, the price of a future good is:
a. less than the price of a current good if the interest rate is negative.
b. equal to the price of a current good if the interest rate is positive.
c. greater than the price of a current good if the interest rate is positive.
d. less than the price of a current good if the interest rate is positive.
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