Suppose the United States chose to legalize the production and use of marijuana but also decided to put a tax on the good. After doing so, suppose that the price that consumers paid fell and the amount that growers got to keep also fell. This would

Question

Quizplus · Accepted Answer

This would indicate that the demand-side effect was smaller than the supply-side effect. When a tax is imposed, the price paid by consumers increases and the price received by producers decreases. However, if the price paid by consumers after the tax is still lower than before the legalization, it suggests that the decrease in supply due to the tax is greater than the increase in demand due to legalization. This would result in a smaller demand-side effect and a larger supply-side effect, leading to a decrease in the amount that growers get to keep.

Suppose the United States Chose to Legalize the Production and Use