Suppose that interdiction efforts have stemmed the flow of illegal drugs into the United States.If there is no change in demand, this leads to higher prices for these substances.The result is an increase in crime as users attempt to maintain their now more expensive habits.Economists would call this effect
A)the illusion of rationality.
B)an externality.
C)the cost disease of personal services.
D)inflation.
E)unemployment.

Question

Quizplus · Accepted Answer

This is an example of a negative externality - the interdiction efforts meant to decrease drug use have unintentionally led to an increase in crime, which imposes costs on society that are not reflected in the price of the drug itself.

Suppose That Interdiction Efforts Have Stemmed the Flow of Illegal