hw 3.1 - flatter, more substitutes, and demand becomes more...

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According to this article, the increase in price cause a decrease in consumers which makes decrease in quantity demanded. Therefore i say yes, the law of demand still will be valid. I think this is elastic because consumers pay certain amount of money for cocaine. Consumers showed 4% sensitive reaction by changing in price in 10%. If cocaine price keep increases, consumer may change to other drugs that are cheaper which means there are substitutions. 11%/-10 = -1.1 [-1.1] = 1.1 which is elastic the future demand curve will be steeper than the current demand. Becasue higher consumption in future year means consumers are addicted to cocain and there are less substitution for addicts. No. I think this case is the exception since cocaine is the addictive drugs. If the material was not the cocaine, the demand curve will be
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Unformatted text preview: flatter, more substitutes, and demand becomes more elastic over time. When demand for cocaine is inelastic, the curve will be steep which means the cocaine price will drop while total revenue also drops. No I think the government wants to increase the price of cocaine to reduce the consumers that was stated in the article, a permanent 10 percent rise in cocaine prices would cut the number of users by 8 percent and cut their cocaine use by 4 percent, that has elastic damand. shifted demand - population( shift right )- expectation ( shift right ) shifted supply - technology ( shift right )- price of input (shift right)...
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This note was uploaded on 06/18/2011 for the course ECON 101 taught by Professor Vicek during the Spring '11 term at Parkland.

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