1. Using the concepts of demand and supply, explain why cannabis prices declined sharply by 70% in Colorado between 2014 and 2018. Use a diagram of the cannabis market to illustrate your point. (180 words)Hints:Was the market of cannabis perfectly competitive before legalization? Who were mainly involved in the business of cannabis at that time? (Some Hollywood movies may help you find the answers.) Was the business of cannabis profitable at that time? Why?How did legalization affect the number of cannabis sellers and buyers in Colorado in 2014 and in 2018, respectively? [In the United States, the recreational use of cannabis was legalized only in 4 states in 2014, while it was legalized by 15 states and Washington D.C. in 2018. Please notice that people from elsewhere may travel to Colorado or other states where the recreational use of cannabis was legal for consuming cannabis.] How would cannabis legalization in other states affect the market demand and supply in Colorado? Did the supply effect dominate the demand effect or the other way around? Why?I would like to know more about whether the market of cannabis was perfectly competitive before legalization specifically.

There was a black market for cannabis before it's legalization. Black market emerges when the demand…

Answered: Using the concepts of demand and…

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter4: The Market Forces Of Supply And Demand

Section: Chapter Questions

Problem 8PA

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1. Using the concepts of demand and supply, explain why cannabis prices declined sharply by 70% in Colorado between 2014 and 2018. Use a diagram of the cannabis market to illustrate your point. (180 words)

Hints:

Was the market of cannabis perfectly competitive before legalization? Who were mainly involved in the business of cannabis at that time? (Some Hollywood movies may help you find the answers.) Was the business of cannabis profitable at that time? Why?
How did legalization affect the number of cannabis sellers and buyers in Colorado in 2014 and in 2018, respectively? [In the United States, the recreational use of cannabis was legalized only in 4 states in 2014, while it was legalized by 15 states and Washington D.C. in 2018. Please notice that people from elsewhere may travel to Colorado or other states where the recreational use of cannabis was legal for consuming cannabis.]
How would cannabis legalization in other states affect the market demand and supply in Colorado? Did the supply effect dominate the demand effect or the other way around? Why?

I would like to know more about whether the market of cannabis was perfectly competitive before legalization specifically.

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