Assume that you are a policy analyst. Use elasticity applications in dealing wit
ID: 1211220 • Letter: A
Question
Assume that you are a policy analyst. Use elasticity applications in dealing with drugs and prostitution issues and policies.
More specifically:
How can we design policies to deal effectively with these issues?
Should we make drugs and prostitution legal???
Provide well-crafted arguments, ideas, and explanations.
Draw comparisons and contrasts by using both a national and an international approach.
Discuss Turing Pharmaceutical raising the price of its drug Daraprim by more than 5,000%. (Elasticity issues may play an important role here).
Explanation / Answer
How can we design policies to deal effectively with these issues?
policies should be designed in such a way that they target the price-elastic consumers more. This would make it possible to see a fall in quantity consumed of drugs, as they would be more sensitive to prices.
The same applies to geographical locations.
Should we make drugs and prostitution legal???
No, as it would only give more freedom to the non-users to try it and fall into the trap of substance abuse.
Discuss Turing Pharmaceutical raising the price of its drug Daraprim by more than 5,000%.
Since Turing Pharmaceutical is a monopoly holder in its drug Daraprim, which holds an inelastic demand, as there are no close substitutes of the drug available, increasing prices of Daraprim would not reduce its quantity demanded (because of its inelastic demand), which would lead to a manifold increase in the company's total revenues and thus prpfits.