Learning with drugs

I've got an economics test tomorrow so I'm doing some multiple choice quizes on the textbooks website and for whatever reason, the guy is teaching us about price elasticity of demand by asking questions about how demand will change if the price of charlie and E increases.

Kinda strange but anyways kiddies:

The if the demand for cocaine is price inelastic and supply decreases. The dealer will:

1:see revenue increase
2:see revenue decrease
3:see no change in revenue
4:see demand decrease

?

My economically-challenged mind thinks it could be any of those

Well, you are in Glasgow Jim!

fool.

demand is price inelastic ie people will put that shit up their nose wether the price increases or not. Increase in price without a huge change in consumption = higher revenue.

that's why the government can tax the shit out of petrol, booze and fags. People will buy it regardless of the tax stuck on it.

Not necessarily. People in Holland go over to Germany to get it with less tax (=cheaper), people in Finland go to Estonia, South England to France etc... And the government loses out.

enough of your commie propaganda.


1 of the basic "laws" of elasticity is that fags, drink and drugs are highly price inelastic. People will and do pay pretty much whatever it is set as. Some will go booze cruises now and again but compared to the amount of people who'll just nip down to asda is pretty minimal.

You're not reading Mankiw, are you?

Well mankiw is the textbook. I haven't even opened it since I bought it. I think my sisters got it. she's alot more into this study9ign malarky than me.

Interesting point. Mankiw is actually pronounced Manky which means dirty or smelly in Glaswegian

Haha. I´m just learning this stuff, 2 months now, and in finnish. And actually...if the supply decreases there are two things the dealer might do...increase the price just as much as it is necessary to get the same amount of money he/she did before. Or increase it very much so that he/she could get better profits.