Assignment:
Question 1. Before the Civil War, the South graded with the North and with England. It sold cotton and bought manufactured goods and food. During the war, one of Lincoln’s first actions was to blockade the ports, which prevented this trade. The South had to increase its production of munitions and food.
1. In what did the South have a comparative advantage?
2. Did the Civil War change any opportunity costs in the South? Did the opportunity cost of everything rise? Or did items cost less?
Question 2. The demand for illegal drugs is inelastic. Much of the expenditure on illegal drugs comes from crime. Assuming these statements to be correct,
1. How will a successful campaign that decreases the supply of drugs influence the price of drugs and the amount spent on them?
2. What will happen to the amount of crime?
3. What is the most effective way of decreasing the quantity of drugs consumed and decreasing the amount of drug-related crime?