(A) Methamphetamine is a highly addictive drug, so it is associated with high necessity, which would mean that for users of this drug, demand would be inelastic. P is a deemed necessity, because it is a good that is not essential for survival, but many users simply think they must have it. Since those who use P generally have a strong addiction and dependence on P, an increase in the price, caused by reduced supply due to increased seizures of precursors used in the manufacture of the drug, such as pseudoephedrine, would lead to most likely a less than proportional decline. change in quantity demanded. Despite this, not all P users are completely addicted, and a price increase would cause some users to reduce the quantity demanded. This is why there is some slope in the demand curve, which means that the price elasticity of demand for P is perfectly inelastic. (B) Unlike the price-inelastic demand for consumers of P, producers of the drug would face elastic demand. supply curve. Indeed, P producers would be more willing to increase the quantity supplied as the price of P increases, in order to take advantage of greater monetary income from the sale of their products. However, as the majority of P producers operate in the short term, their price elasticity is not as high as it could be, because the supply of raw materials is fixed, and therefore limited in quantity.(C ) The decrease in the amount of available raw materials used to produce P has caused a decrease in the supplied amount of P, as less can be produced than before (due to the shortage of pseudoephedrine). This resulting scarcity of P caused P producers to increase the price of P. the equilibrium price increased significantly...... middle of paper ...... price makers, If it were to be legalized, this activity would most likely resume, as consumers would prefer to access the product without price or quantity regulations. The only way for the government to control P use is to attempt to contain the quantity supplied, as well as reduce the quantity demanded. In my opinion, the two best tactics that authorities can use to try to control the quantities demanded and supplied are: • Persist with current supply-side policies, with the aim of significantly reducing the amount of P supplied in New -Zealand. education programs, with the aim of reducing consumers' willingness to consume P. Diagram 5 shows the impact of supply and demand control methods to control P, the equilibrium quantity is significantly reduced. Compare this with Figure 4, where a tax has only a limited effect on the quantity..