Elasticities and Price Controls, Microeconomics

Assignment Help:
Suppose that two anti-marijuana proposals are currently being debated in Congress. Proposal I will reduce the supply of marijuana and cause its price to rise by 7%. Proposal II will reduce the tax on beer and cause its price to fall by 5%. Based on recent estimates, the price elasticity of demand for marijuana is -1.10 and the cross-price elasticity of demand between marijuana and beer is 1.30. If the only objective of the anti-marijuana proposals is to reduce marijuana consumption by the greatest amount, which proposal would you recommend and by how much will it reduce consumption?

Related Discussions:- Elasticities and Price Controls

Disadvantages of mixed economy system, The drawbacks of a mixed economy act...

The drawbacks of a mixed economy actually depend on how "mixed" it is. For instance, if it is mixed more towards a free-market, there is little regulation (some may see this as a g

Consumer surplus, suppose ismail were to eat five pizzas per week.what is t...

suppose ismail were to eat five pizzas per week.what is the total value ismail would place on his five weekly pizzas?

Problem in measuring depreciation, Economists view depreciation as capital ...

Economists view depreciation as capital consumption for them, there are two distinct ways of charging for depreciation (1) the depreciation of equipment must equal its opportunity

Borrowings, Borrowings: The widening fiscal gap led to a steep rise in...

Borrowings: The widening fiscal gap led to a steep rise in the outstanding liabilities of the Central Government. The outstanding domestic debt of the Central Government as a

Quantity demanded, What is the difference between change in quantity demand...

What is the difference between change in quantity demanded and change in demand

Decay toothbruch, What is the arc cross elasticity of demand between Stop d...

What is the arc cross elasticity of demand between Stop decay''s toothbrush and Decay fighter''s toothbrush? What does this indicate about the relationship between the two products

Environmental scan and swot analysis, Environmental Scan SWOT analysis:...

Environmental Scan SWOT analysis: SWOT analysis will help to describe about the strengths, weakness, opportunities as well as threats. This is the strategic planning method

Explain about the specification of economics environments, Explain about th...

Explain about the specification of economics environments. Specification of Economic Environments: The primary step for studying an economic issue is to identify the econom

Profit maximization, critically analysis firm theory of profit maximization...

critically analysis firm theory of profit maximization?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd