Question

. The consequences of decriminalizing illegal drugs have long been debated. Some claim that legalization will...

. The consequences of decriminalizing illegal drugs have long been debated. Some claim that legalization will lower the price of these drugs and reduce related crime and that more people will use these drugs. Suppose some of these drugs are legalized so that anyone may sell them and use them. Now consider the two claims—that price will fall and quantity demanded will increase. Based on positive economic analysis, are these claims sound?

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Answer #1

When legalization of drugs takes place, then Physicians can write it on their prescriptions. It will increase the demand of these drugs. Further, sellers who were illegal or unauthorised, will now become legal, registered and authorised sellers. As per the positive economic analysis, increase in demand of these drugs, will increase the price, rather it will be decreased. Here, positive economic analysis is based upon the economic reasoning and logical thinking. According to this analysis, legalisation of drugs, is a determinant that will cause demand curve to shift to the right. It will cause price at new equilibrium to increase.

So, the claim of price fall and increase in quantity demanded, is not sound.

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