Illegal drugs such as cocaine are a multi-billion dollar "industry." While there is effectively a single importer of cocaine - the Cali Cartel - there are many, small sellers (dealers), many buyers (users), and a fairly homogeneous product. So, it seems that the supply and demand model might be appropriate for gaining some insights into the likely effects of various drug policies.

For each of the policies listed, explain

1. what changes it would cause in the demand and supply of cocaine,
2. whether overall cocaine usage would rise or fall, and
3. whether the street price of cocaine would rise or fall.

Finally, for each policy, draw a graph on the back that supports your answer.

	Policy 1. The federal government allows an increased role for the military in interdicting cocaine being brought into the country.	Policy 2. Longer jail sentences are enacted into law for users and plea bargains are prohibited.	Policy 3. Cocaine is legalized both for possession and sale.
Effect on Demand
Effect on Supply
Effect on Usage
Effect on Price

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