Well alcohol, marjuna and other intoxicants are substitutes. So customers opt for one or other. With the entry of new monopoly firms in this market increase which reduce demand for alcohol. This will inturn decrease price of alcohol.Hence profits of alcohol industries will fall On the other hand there is monopoly in marjuna and due to strong barriers to entry alcohol firms can't easily set up their own firms in the marijuana market. So they can't compete with monopoly. Furthermore this monopoly firm will have more profits and hence more power. Hence the concerns of alcohol firms are genuine
Assume that the marijuana market is a single-price monopoly where market demand is linear and downward-sloping and the suppliers' marginal cost is upward sloping The state government tells you th...
You are hired as an economic consultant by a state government that w like to analyse th your answer you should use appropriate models (and diagrams) studied in class. impact of legalization of mar n Of ǐftre na tak ng acco otential mar e ucture . n Assume for now that the marijuana market is a single-price monopoly where market demand is linear and downward-sloping and the suppliers' marginal cost is upward sloping. 3. The state government tells you that...
Assume that the marijuana market is a single-price monopoly where market demand is linear and downward-sloping and the suppliers' marginal cost is upward sloping This question is about market structure a. Before legalization, we described the market as a monopoly. Justify this assumption. b. How might legalization change the market structure of marijuana? That is, before legalization, the market was described as monopoly, but how will this change with legalization and why? Assume that the marijuana market is a single-price...
Background to the question Over the past few years some states in the United States have begun to legalize marijuana, while other states have not. In addition to legalizing marijuana, some states, such as California have introduced a tax on all marijuana products. QUESTION You are hired as an economic consultant by a state government that would like to analyse the impact of legalization of marijuana, taking account of different potential market structures. In your answer you should use appropriate...
You are hired as an economic consultant by a state government that would like to analyse the impact of legalization of marijuana, taking account of different potential market structures. In your answer you should use appropriate models (and diagrams) studied in class. Assume for now that the marijuana market is a single-price monopoly where market demand is linear and downward-sloping and the suppliers' marginal cost is upward sloping 1. The state government is deciding whether to legalize the sale of...
Background to the question Over the past few years some states in the United States have begun to legalize marijuana, while other states have not. In addition to legalizing marijuana, some states, such as California have introduced a tax on all marijuana products. QUESTION You are hired as an economic consultant by a state government that would like to analyse the impact of legalization of marijuana, taking account of different potential market structures. In your answer you should use appropriate...
2. Consider a downward-sloping market demand and an upward-sloping marginal cost. For each of the following situations, show the Social Marginal Benefit and Social Marginal Cost curves and explain whether the presence of the externality leads to a monopoly equilibrium with too much or too little production relative to the socially optimal outcome. (a) A negative externality associated with production (b) A negative externality associated with consumption (c) A positive externality associated with consumption.