Problem_Set_3 - Department of City & Regional Planning...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Department of City & Regional Planning CP 113A - Fall 2006 U niversity of California at Berkeley Mark Wolfe PROBLEM SET #3 Due in Class Thursday, November 2, 2006 1. Consider Humboldt County, California where a substantial share of the arable land is used to grow marijuana. The production of marijuana is illegal, and there are harsh penalties imposed on marijuana growers who are caught. Marijuana growing is a lucrative and extremely competitive industry. Assume that economic profits therefore equal zero (total revenue = total costs). Included in the costs are the various costs associated with engaging in legal activities, such as high concealment costs, legal costs, opportunity cost of time spent under arrest or in jail, and very high transportation and labor costs. Suppose that the California electorate passes a ballot measure legalizing marijuana production and consumption. a. Draw a graph showing the effects of the legalization on the equilibrium price and quantity of marijuana. Explain your graph. b.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

Problem_Set_3 - Department of City & Regional Planning...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online