There is a debate about whether sterile needles should be given out in cities with high drug use. Some say that doing so will decrease HIV/AIDS from sharing needles. Others believe it will encourage drug use. As an economist, you must know the following:

Question

There is a debate about whether sterile needles should be given out in cities with high drug use. Some say that doing so will decrease HIV/AIDS from sharing needles. Others believe it will encourage drug use. As an economist, you must know the following:
-How responsive the spread of HIV/AIDS is to the price of needles
-How responsive drug use is to the price of needles

Assuming you know these, use the concepts of price elasticity of demand for sterile needles, and the cross-price elasticity between drugs and sterile needles to answer the following:
a. In what circumstances do you believe distributing free needles is a beneficial policy?
b. In what circumstances do you believe distributing free needles is a bad policy?

Redo the above given the following:
SHIV/AIDS = 100 + 2Pn + Pd (supply function)
Ddrugs = 50 - Pn - Pd (demand function)

Pn = price of needles
Pd = price of drugs

Assume that HIV/AIDS is transmitted and spread entirely through drug use.

*All I know is that you have to compute the relevant point measures of elasticity at equilibrium prices.

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