On January 1, 2014 the U.S. state of Colorado legalized the "recreational" use of marijuana. In a documentary produced by the HBO program "VICE" regarding the impact of the legalization of marijuana:

a) Do you think marijuana is elastic or inelastic? Would you classify marijuana as a normal or inferior good? Explain why for both these questions. (3 points)

b) One of the marijuana business people (Elan Nelson of Medicine Man Marijuana) interviewed noted that on the first day of legalized sales they did three times the business of their previous best day. Graph 8 in the Figures file on your moodle page offers one possible S&D graph for the above situation. Do you agree, (given your response in part a). Explain. (4 points)

c) What are the likely substitutes and compliments for the legalized marijuana industry? Explain. (3 points)