In class, we decided that the demand for medical cannabis is likely to be less elastic than the demand for recreational cannabis because medical cannabis has fewer substitutes. Ceteris paribus, this means that a $1.00 cannabis subsidy would have a bigger effect on the quantity sold for:

A. Medical cannabis than for recreational cannabis.
B. Recreational cannabis than for medical cannabis.
C. Same effect on both.

And a tax of $1.00 would have a bigger effect on the quantity sold for:

A. Recreational cannabis than for medical cannabis.
B. Same effect on both.
C. Medical cannabis than for recreational cannabis.

Question

22-02-2024
Business

High School

Thank you for visiting In class we decided that the demand for medical cannabis is likely to be less elastic than the demand for recreational cannabis because medical cannabis. This page is designed to guide you through key points and clear explanations related to the topic at hand. We aim to make your learning experience smooth, insightful, and informative. Dive in and discover the answers you're looking for!

In class, we decided that the demand for medical cannabis is likely to be less elastic than the demand for recreational cannabis because medical cannabis has fewer substitutes. Ceteris paribus, this means that a $1.00 cannabis subsidy would have a bigger effect on the quantity sold for:

A. Medical cannabis than for recreational cannabis.
B. Recreational cannabis than for medical cannabis.
C. Same effect on both.

And a tax of $1.00 would have a bigger effect on the quantity sold for:

A. Recreational cannabis than for medical cannabis.
B. Same effect on both.
C. Medical cannabis than for recreational cannabis.

Answer :

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gangapuramkrishna146 gangapuramkrishna146 · Answer 1 · 2025-05-02T03:41:53-04:00

Final answer:

A $1.00 subsidy would have a larger effect on the quantity of medical cannabis sold due to its less elastic demand. Conversely, a $1.00 tax would impact the quantity of recreational cannabis sold more significantly precisely because of its more elastic demand.

Explanation:

Given the details in the question about the elasticity of cannabis, the impact of a subsidy or a tax would be different for recreational and medical cannabis. A $1.00 subsidy would have a bigger effect on the quantity sold for medical cannabis (Answer A) than for recreational cannabis because the demand for medical cannabis is less elastic. This is due to the fact that it has fewer substitutes, meaning its demand is less responsive to price changes. On the other hand, a $1.00 tax would have a bigger effect on quantity sold for recreational cannabis (Answer A) than for medical cannabis. This is because recreational cannabis demand is likely more elastic, meaning its demand is significantly affected by price changes, much like the case of youth smoking versus adult smoking presented in your information.

Learn more about Elasticity of Cannabis Demand here:

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