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Evaluating: Asking Critical Questions
Chapter Quiz

Sex, Booze, and Drugs

Prior to 1914, cocaine was legal in this country; today it is not. Alcohol (of the intoxicating variety) is legal in United States today; from 1920 to 1933 it was not. Prostitution is legal in Nevada today; in the other 49 states it is not. ¹All of these goods—sex, booze, and drugs—have at least one thing in common: The consumption of each brings together a willing seller with a willing buyer; there is an act of mutually beneficial exchange (at least in the opinion of the parties involved). Partly because of this property, attempts to proscribe the consumption of these goods have (1) met with less than spectacular success, and (2) yielded some peculiar patterns of production, distribution, and usage. Let's see why.

When the government seeks to prevent voluntary exchange, it generally must decide whether to go after the seller or the buyer. In most cases—and certainly when sex, booze, or drugs have been involved—the government targets sellers. Because this is where the authorities get the most benefit from their enforcement dollars. A cocaine dealer, even a small retail pusher, often supplies dozens or even hundreds of users each day, as did speakeasies (illegal saloons) during Prohibition; a hooker typically services anywhere from three to ten tricks per day. By incarcerating the supplier, the police can prevent several—or even several hundred—transactions from taking place, which is usually much more cost-effective than going after the buyers one by one. It is not that the police ignore the consumers of illegal goods; indeed, sting operations—in which the police pose as illicit sellers—often make the headlines. Nevertheless, most enforcement efforts focus on the supply side, and so shall we.

Law enforcement activities directed against the suppliers of illegal goods increase the suppliers' operating costs...[When] the costs of operation are higher, and at any given price, less of the product will be available. There is a reduction in supply, and the result is a higher price for the good.

¹These statements are not quite correct. Even today, cocaine may be legally obtained by prescription from a physician. Prostitution in Nevada is legal only in those counties that have, by virtue of local option, chosen to proclaim it as such. Finally, some counties in the United States remain dry, prohibiting the sale of beer, wine, and distilled spirits.

Miller, R.L., Benjamin, D.K., & North, D.C. (2001). The Economics of Public Issues, 12./e, New York: Addison Wesley Longman, pp. 38-39.

1 .
Match the following terms with their definitions or examples. [Hint]
Using the pulldown boxes, match each item on the left to the corresponding item at right.

1.1 intoxicating A. directed by each toward the other

1.2 consumption B. to excite or stupefy by alcohol or a drug

1.3 mutually C. the use of economic goods in terms of wants

2 .
Match the following prefixes with their meanings. [Hint]
Using the pulldown boxes, match each item on the left to the corresponding item at right.

2.1 beneficial A. receiving an advantage

2.2 exchange B. the act of giving or taking one thing in return for another

2.3 proscribe C. forbid as harmful or unlawful

3 .
Match the following terms with their definitions or examples. [Hint]
Using the pulldown boxes, match each item on the left to the corresponding item at right.

3.1 distribution A. The forbidding by law of the manufacture, transportation, and sale of alcoholic liquors except for medicinal and religious purposes.

3.2 retail B. to sell in small quantities directly to the ultimate consumer

3.3 prohibition C. to divide among several or many

4 .
Match the following terms with their definitions or examples. [Hint]
Using the pulldown boxes, match each item on the left to the corresponding item at right.

4.1 transactions A. not according to or authorized by law

4.2 illegal B. not permitted; unlawful

4.3 illicit C. an exchange or transfer of goods, services, or funds

5 .
Match the following terms with their definitions or examples. [Hint]
Using the pulldown boxes, match each item on the left to the corresponding item at right.

5.1 virtue A. to put in prison

5.2 proclaim B. power of a thing

5.3 incarcerating C. to declare publicly

6 .
The statement below is a/an (correct fact, incorrect fact). Prior to 1914, cocaine was legal in this country; today it is not. [Hint]

7 .
The statement below is a/an (incorrect fact, correct fact). Some counties in the United States remain dry, prohibiting the sale of beer, wine, and distilled spirits. [Hint]

8 .
The statement below is a/an (incorrect fact, correct fact). Prostitution is legal in Nevada today; in the other 49 states it is not. [Hint]

9 .
The statement below is a/an (opinion, informed opinion). Partly because of this property, attempts to proscribe the consumption of these goods have (1) met with less than spectacular success, and (2) yielded some peculiar patterns of production, distribution, and usage. [Hint]

10 .
The statement below is a/an (opinion, informed opinion). ...there is an act of mutually beneficial exchange. [Hint]

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