SEMESTER SPRING 2012 Economics (ECO401) Assignment No.

1
Due Date: 12th April, 2012 Marks: 20

The Case:
Pakistan is facing a persistent problem of illegal use of drugs such as heroine, cocaine and crack. According to the annual report of United Nations Office on drug and crime, Pakistans annual heroine market is worth $1.2 billion. More than 90% of the worlds opium which is used for the production of alcohol and heroine is produced in neighboring country Afghanistan and distributed to Pakistan, Iran and other countries. Pakistan is one of the main suppliers of heroine to the whole world. According to government sources, 600,000 people enter into drug abuse in Pakistan annually. Drug use has several adverse effects. One is that drug addiction can destroy the lives of drug users and their families. Another is that drug addicts often turn to robbery and other violent crimes to obtain the money needed to fulfill their habit. Several steps have been taken by the Government of Pakistan to minimize the use of drugs.

Requirement:
Part A:
Following steps have been taken by the government to minimize the use of drugs. Identify the effect of each step on demand curve of drugs, supply curve of drugs, equilibrium price and equilibrium quantity of drugs with the help of diagram. a. Government imposes ban on some drugs from entering the country. b. Government introduces awareness programs to educate the general public about the harmful effects of drug usage. c. Government hires new anti-narcotics officers to fight against the usage of drugs.

Part B:
Being an economist, elaborate the impact of supply side policies on prevailing drug related crimes in Pakistan in short run and long run? (Marks: A = 5+5+5, B = 5)

Instructions:
Please read the following instructions carefully before preparing the assignment solution: For acquiring the relevant knowledge, do not rely only on handouts but watch the course video lectures, which can be downloaded for free from www.youtube.com/vu and also use other reference books. For planning your semester activities in an organized manner, you are advised to view schedule of upcoming Assignments, Quizzes and GDBs in the overview tab of the course website on VULMS. Graphs are very important in Economics course. This assignment will enhance your skill of drawing graphs. A complete procedure of How to draw graphs in MS-Word is uploaded on announcement page of LMS. Get help from that uploaded file to solve your assignment. Corrigendum related to lecture # 2, 3, 5, 6 and 7 have been uploaded on LMS in the announcement section. Read these corrigenda attentively before solving assignment. Draw diagrams by yourself. Do NOT copy from any source. NO need to write irrelevant material. Properly label the diagrams where required. Labeling also contains marks.

Note:
Only in the case of Assignment, 24 hours extra / grace period after the due date is usually available to overcome uploading difficulties which may be faced by the students on last date. This extra time should only be used to meet the emergencies and above mentioned due dates should always be treated as final to avoid any inconvenience.

Important Instructions:
Please read the following instructions carefully before attempting the assignment solution. Deadline: Make sure that you upload the solution file before the due date. No assignment will be accepted through e-mail once the solution has been uploaded by the instructor.

Formatting guidelines: Use the font style Times New Roman/ Arial and font size 12. It is advised to compose your document in MS-Word 2003. Use black and blue font colors only.

Solution guidelines: Every student will work individually and has to write in the form of an analytical

assignment. Give the answer according to question. For acquiring the relevant knowledge dont rely only on handouts but watch the video lectures and use other reference books also.

Rules for Marking Please note that your assignment will not be graded or graded as Zero (0) if: It has been submitted after due date The file you uploaded does not open or is corrupt It is in any format other than .doc (MS. Word) It is cheated or copied from other students, internet, books, journals etc