In this research and analysis assignment (paper), you will use various microeconomic theories to analyze the effect of government regulations in a new market.In 2012, both Colorado and Washington citizens passed ballot measures allowing the production, sale and use of marijuana for recreational purposes.ÿIn both cases, the ballot measure authorized the legislatures to develop regulatory regimes, and to impose taxes to pay for the regulation.ÿ(Note: in Colorado, those taxes had to be approved by a vote of the people, and they were, in 2013.)Use the microeconomic theory we have been studying to analyze the legal and illegal markets for marijuana in Colorado or Washington, specifically with regard to the following issues:Will the legal market survive or thrive if the taxes cause prices to be higher than the blackmarket?ÿThe impact of taxesÿdepends critically on whetherÿdemand in the legal market price elastic or price inelastic, soÿuse elasticity theory to explain your determination.ÿRemember, the law of demand says that when price rises, quantity demanded falls.ÿElasticity helps us to answer the next question, “how much.”ÿIn what market structure do the retail marijuana establishments operate (perfect competition, monopoly, monopolistic competition, oligopoly)?ÿExplain.ÿTo address this question, you will need to know a bit about the regulations that have been passed.ÿThe local newspapers (in Colorado, theÿDenver Post) have provided good coverage of the issue, both before the 2012 vote, and during the process of crafting the regulations.ÿIn Colorado, information about regulation and taxation of marijuana, including thisÿ2016 overview of Colorado marijuana regulationÿ,ÿcan also be found by searchingÿtheÿthe web site of the Colorado General Assembly.Colorado General AssemblyWhy is government regulation desired or needed for this product and industry?ÿWhat are might be the “misallocation of resources” without government intervention?ÿWhat will be the costs of that regulation?Your paper should be three to four pages, and should include references and citations formatted according to APA style..Grade Criteria A to A- 90 – 100%Paper accurately applies principles of elasticity and market structurePaper addresses the potential for market failure to evaluate the need for government interventionPaper addresses the costs and benefits of government regulation of the marketPaper makes its case through research, using credible sources (such as those suggested in the assignment) and logical ideas; opinions on subjects where there is political, economic, and social disagreement were founded on factsMechanics of writing are strong; few if any errorsPaper cites sources using style appropriate to the discipline

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