1. To examine the different sides of the debate about marijuana legalization, please visit the following websites:

http://www.drugpolicy.org/sites/default/files/dpa_marijuana_legalization_report_v8_0.pdf

https://www.sheriffs.org/sites/default/files/2016%20FINAL%20Legalization%20of%20Marijuana%20in%20Colorado%20The%20Impact.pdf

http://thehill.com/opinion/criminal-justice/370519-lies-damned-lies-and-statistics-about-marijuana-legalization

After reading the executive summaries and browsing through the articles, please answer the following questions:

a. According to the Drug Policy Alliance, what have been the effects of legalizing marijuana across the United States?
b. According to the sheriff’s association, what have been the effects of legalizing marijuana in Colorado?
c. According to Professor Kamin, what may account for the differences in the two reports?

2. Suppose that the market for bananas in Binghamton on an average weekday is given by the following equations:

demand: P = 46 – 3Q
supply: P = 6 + 2Q

where P is the price of a bushel in dollars and Q is quantity in bushels.

a. What is the equilibrium price and quantity? Show graphically.
b. Assume that the National Institutes of Health issues a study showing that bananas reduce the risk of cancer. The demand for bananas increases to:

demand’: P = 66 – 3Q

At the original equilibrium price, is there a shortage or a surplus? Of how much?
c. What is the new equilibrium price and quantity? Show graphically.

3. Find an article from the New York Times, Wall Street Journal, the internet, or another publication concerning a particular change in a specific market. Using a supply and demand graph, show the effects on the market that the article is discussing. Please hand in a copy of the article with your problem set.

4. Hershey Krackle bars are candy bars made with chocolate and crisped rice. Using supply and demand curves, show the effects of the following events on the market for Hershey Krackle bars. Use a separate graph for each question. Be sure to label all axes, curves, and equilibrium points. What happens to price and quantity in each case?

a. an increase in consumer income (Assume a normal good.)
b. an increase in the price of rice
c. a decrease in the price of Nestle Crunch bars (a substitute)
d. Hershey builds a new, more efficient factory.
e. an increase in the price of light bulbs.

5. Assume that the market for unskilled fast food workers in New York is given by the following equations:

demand: P = 11.00 – .002Q
supply: P = 2.00 + .001Q

where P is the price of labor (wage rate per hour) and Q is the quantity of labor hours per day.

a. Find the equilibrium price and quantity. Show graphically.
b. Suppose that the government imposes a minimum wage of $7.00 per hour.
What is the result in the market? Is there a shortage or surplus? Of how
much?