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Question:Predict what would happen to the equilibrium price of marijuana if it were legalized. Use demand & supply analysis to a - Research Paper Example

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Name: Tutor: Course: Date: The equilibrium price of marijuana if it were legalized Clinical studies reveal that marijuana is a drug, with a potential capacity to provide optimum medicinal advantage, at some point (Miller 81). There are drugs however, that if misused, instead of providing its maximum function could harm rather than provide healing…
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Question:Predict what would happen to the equilibrium price of marijuana if it were legalized. Use demand & supply analysis to a
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Download file to see previous pages One reason that prevents the supply of marijuana is not mainly the level of the actual production, but primarily due to the hesitation of producers to produce because of the legal restriction that the authority or government employed on the product. For this reason and due to the associated risk of distribution, suppliers and distributors priced marijuana at its optimum amount, leaving the consumer to pay for a relatively higher price for the final product. Concerning this, the work at hand, tries to consider the equilibrium price of marijuana if it were legalized by using the demand and supply analysis, so to illustrate the proponent’s point of view on this economic issue. Prior to providing the required answer of the above objective, let us first review the concept of the law of supply and demand. The law of supply and demand is a theoretical economic concept telling us the interaction between the supply of a product or service offerings and the demand for that offerings (Colander 795). This interaction has significant impact on price. Thus, generally, the price of the product will be higher if its supply is low, but the demand is high, and in contrast, the price will be lower if the supply is low and the demand is high (Kinney and Raiborn 645). Figure 1. Supply and Demand Curve We see in Figure 1 the actual interaction of supply and demand resulting to the equilibrium price where quantity demanded and supply demanded met. The equilibrium price will therefore vary, depending on the interaction between the supply and demand curves. As the supply is higher and the demand is lower, the price is expected to be lower (Figure 1.II). Correspondingly, as the demand is higher, but the supply is lower, the price will be higher (Figure 1.II). Now let us go back to the main point of this paper. The legalization of marijuana will significantly have an impact on the supply and demand curve of this product and particularly on its price. Considering at the moment, when marijuana is treated mostly illegal in many places, we can depict some meaningful observations. First, those who supply will at some point hesitant to pursue the production, resulting to low distribution and eventually minimal supply. If we will assume that the demand is constant, which means that the market for marijuana is still active even in the midst of prevailing legal constraints, then we can expect that the demand is still higher. This therefore leads us to the supply and demand curve for marijuana as illustrated in Figure 1.II, which indicates that the price for marijuana will be higher. On the other hand, since the government’s legal constraint against marijuana is present, the number of users will at some point has the tendency to decrease or remain constant, as those who might aim to make an attempt; especially new potential users may be hesitant to try at all. However, this point will never change the fact that the demand for marijuana is still higher even if the distribution has become too risky for the producers and distributors, which significantly is the reason of a potential higher price due to a limiting constraint linked to the actual distribution of supply. It is now of important consideration if things will change if the government will try to legalize the distribution of marijuana just like those other drugs out in the market for legal consumption. First thing ...Download file to see next pagesRead More
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