Asked by Jonah Marukot on Apr 24, 2024
If marijuana were legalized, it is likely that there would be an increase in the demand for marijuana. If demand for marijuana is inelastic and the supply of marijuana is perfectly elastic, this will result in
A) higher prices and higher total revenue from marijuana sales.
B) higher prices but lower total revenue from marijuana sales.
C) the same price and higher total revenue from marijuana sales.
D) the same price but lower total revenue from marijuana sales.
Inelastic
A characteristic of a good or service whose demand does not significantly change with a change in its price.
Perfectly Elastic
A situation in economics where any small change in the price of a good or service will result in an infinite amount of change in the quantity demanded or supplied.
Total Revenue
The total amount of money earned by a firm from the sale of its products or services before any costs or expenses are subtracted.
- Absorb the fundamental idea of price elasticity linked to supply and demand.
- Explain the consequences of legalization on market outcomes for products like marijuana.
Learning Objectives
- Absorb the fundamental idea of price elasticity linked to supply and demand.
- Explain the consequences of legalization on market outcomes for products like marijuana.
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