Economics 9708 · AS & A Level · Income elasticity of demand

Income elasticity of demand — practice question

A country’s government announces that the penalties for anyone convicted of supplying an illegal drug to other people will be raised, but that having small amounts of the drug for personal use will no longer count as an offence. What effect are these changes likely to have on the illegal market price of that drug and on the quantity consumed?

  • Aillegal market price increase; quantity consumed decrease
  • Billegal market price increase; quantity consumed uncertain
  • Cillegal market price uncertain; quantity consumed decrease
  • Dillegal market price uncertain; quantity consumed uncertain

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