Help me understand economics?

can anyone explain to me the price elasticity of demand and supply of illegal substances? please and thank you.


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Most Helpful Guy

  • Supply I suspect is very inelastic. Most individual producers are probably cranking out as much as they can, traffickers move as much as they can, dealers sell what they can. A 10% move up or down in price wouldn't - I'd guess - change supply very much. Big price changes would result in more resources getting drawn into the distribution and supply of the drug.

    Demand, I'm not sure about. It -might- be more elastic. If a fair number of users consume based on what they can afford, then the amount they purchase will be somewhat elastic. My initial impulse was to say demand was inelastic, but the more I think about it, the more I think a lot of buyers have something closer to a fixed budget.

    The main factor in drug economics though is that supply is radically constricted both by the barriers to entry (aka the DEA) and the fact that various supply side parties shoot each other to try to restrict supply and drive up price without cutting their own sales back.

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What Guys Said 1

  • When supply is low and demand is high. The price obviously increases. When Supply is high and demand is low. The price decreases. When supply is high and demand is high. The price also increases. Then it also depends on a lot of factors including if the economy is good or bad, etc. One way to look at it is since everything is going up in price. It pushes other prices up as well.

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What Girls Said 1

  • I assume you're referring to drugs? If so, it's a bit different than regular goods because of things like addiction being the main focus point. If the price is high but there is less of a product chances are you'll sell less, but if your prices are higher and you have more of your product you'll sell more. The reason behind this is a person who is addicted will always go to the person who is always on deck (or in stock) despite the price. But if you have other dealers as your competition you'll knock down your price so more people come to you (because what crackhead doesn't like a good deal?), but if you do that then chances are your product would have to be made cheaper and won't be as potent as your competitors and you'll loose consumers.

    The trick is having a worth paying for product that is hard to come by, and having enough of it. Also building a relationship with consumers so they feel like they're getting a deal.

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