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What do you think would be the effect on the equilibrium price and quantity of marijuana...

What do you think would be the effect on the equilibrium price and quantity of marijuana if its sale and consumption were legalized in canada? Will the Supply Curve shift, and if so, to which direction? How about the Demand curve? Will it shift and to which direction? What will happen to price and quantity exchanged?

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Answer #1

If marijuana is legalised what happens is that more people will be motivated to cultivate the crop because it is legal in nature as a result of which the supply curve shift to the right with which it indicates the increase in supply as a result of which equilibrium price decreases and equilibrium quantity increases and also because it is legalised many people will start to to consume as a result of which the demand increases and the demand curve shift to the right and this increases the equilibrium price and equilibrium quantity and in both the cases the equilibrium quantity is increasingbut in one case the equilibrium price is increasing and another case the equilibrium price is decreasing in there for the change in prices is ambiguous in this regard the given figure below tells about the the shift in demand and supply

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