Supply and Demand: Suppose a survey shows an increase in illicit drug use by young people in the US. In the ensuing debate, two hypotheses for the increase are proposed:
Hypothesis 1: Reduced police efforts have increased the availability of drugs on the street.
Hypothesis 2: Cutbacks in education efforts have decreased awareness of the dangers of drug addiction.
a. For each hypothesis, specify the category of the factor that changes demand (like Income) or Supply (like Technology) and provide a one sentence justification. Use separate supply and demand diagrams to illustrate how each of these hypotheses could lead to an increase in the quantity of drugs consumed. Be sure to carefully label each graph, and clearly specify the initial equilibrium and the final equilibrium.
b. In a maximum of two sentences, explain how information on what has happened to the price of drugs could be used to determine which of these explanations is correct?