Marijuana is an illegal substance in Canada. Suppose in the underground market for Marijuana, the supply curve for Marijuana can be written as = 200 + 2 and the demand curve for Marijuana can be written as = 500 4 where is the price of Marijuana and is the quantity of Marijuana.

(a) Show how to solve for equilibrium quantity and price of Marijuana, total expenditure on Marijuana by the addicts, consumer surplus , producer surplus , and total surplus .

(b) Suppose the government passes a law to grant Marijuana the legal status so that it

can be purchased over the counter without prescription in Canada. However,

Marijuana is still considered an undesirable product in the society and the

government imposes a minimum legal price on Marijuana at $60 above from

part (a). Demonstrate how to compute quantity demanded , quantity supplied

, consumer surplus , producer surplus , total surplus , and the

(c) Separate from part (b). Now that Marijuana is legal and the addicts complain it is

too expensive at from part (a) in which many addicts must commit crimes to

pay for their addiction. Suppose the government agrees with their view and

imposes a maximum legal price on Marijuana at $60 below from part (a).

Demonstrate how to compute quantity demanded , quantity supplied ,

consumer surplus , producer surplus , total surplus , and the deadweight

loss .