If the demand for illegal drugs is inelastic, then a government policy to cause their price to increase would cause total revenue from drug sales to
A) rise.
B) fall.
C) stay the same.
D) drop to zero.

Question

Quizplus · Accepted Answer

If the demand for illegal drugs is inelastic, a government policy to cause their price to increase would cause total revenue from drug sales to rise. This is because when the price of a good with inelastic demand increases, there is a proportionally smaller decrease in the quantity demanded, leading to an overall increase in revenue. In the case of illegal drugs, the demand is often inelastic due to addiction or other factors that make people willing to pay high prices for the drugs.

If the Demand for Illegal Drugs Is Inelastic, Then a Government