ECO401 Assignment No. 1 Spring 2012 Solution

Economics (ECO401)

Assignment No. 1


Answer 1 :

Govt bans some drugs from entering the country.


The all three steps will have effect on demand curve negatively and the graph will shift r down ward after every step.


Demand curve

Demand of Heroin

Supply  curve


Similarly supply curve will behave. From downwards to upwards


Supply of Heroin

Equilibrium Quantity and Qquilibrium Demand Curve

Impact of Supply side policies in Short Term.


There will be use of illeagal methods to supply the drugs because of the ban and public awareness by the govt. Drug seller will try to supply through other hidden channels, like, cars, vans and using some other material which could hide the drugs. This will be done right after the ban and other steps by the govt.

Impact of Supply side policies in Long Term.


In long term, the suppliers of the drugs will keep on thinking the supply channels, can be safer for the supply in future and this will create some more problems in the society. The user of the drugs will try to reach by themselves to the manufacturers or the areas of the manufacturing drugs and they will use some illegal steps to do so.