“This year the weather smiled on us, and we made a good crop,” said a wheat farmer in Manitoba. “But just as we made a good crop, the economic situation changed.” This quotation brings to mind the saying, “If you are a farmer, the weather is always bad.” Using economic theory, how would you explain that this saying might be true? What can you say about the elasticity of demand for wheat and what do you suppose happens to the farmers’ total revenue if there is a bumper crop?
- Answer each part of question (a) clearly. Do not need introduction or conclusion.
- First, explain with economics theory why BOTH good and bad weather is not good for farmers. The answer to this is based solely on economics. One paragraph only.
- Explain what you think the elasticity of demand for a product like wheat might be and why; and similar products come to mind?
- Study carefully the relationship between elasticity of demand and total revenue; meaning how does a different elasticity impact total revenue. Once you understand this relationship, and you know the elasticity of demand for wheat, apply them to a situation where the farmer has a bumper crop of wheat by explaining plain how the farmer’s total revenue is affected.
Along with your textbook reading, review the related videos and article (below) for a background on Canada’s marijuana legalization, then respond to the following questions:
In your own words, discuss any positive or negative economic after-effects mentioned in the article or videos. Do you see any other economic effects not mentioned or might occur in the longer period? Which ones concern you and why? What major changes do you see happening with the demand and supply of the cannabis market in the long run?
Again, pay attention to all parts of the question on marijuana legalization. Do not need introduction or conclusion.
Notice that the question asks you to focus on the economic effects, so be careful not to go into things like ethics, social arguments, etc. Stay with the economic impacts.
Read up on what the long-term period means in economics, as opposed to the short-term period. One you understand the difference try and identify some effects from marijuana legalization that will occur in the long-term and state which ones you are concerned about and why, briefly.
Finally, explain what you think will happen to the demand and supply of marijuana products in the long term and why you think so. You should read up on the factors that affect demand and supply besides price in order to answer this.
CBC News: The National. (2015, October 26). How marijuana legalization could change Canada [Video]. YouTube. https://www.youtube.com/watch?v=jjEVHoOrbrY
CBC News. (2018, October 17). Canadians celebrate legal weed [Video]. YouTube. https://www.youtube.com/watch?v=T9N3kufjmic
MSNBC. (2018, October 17). What Canada’s marijuana legalization means for the U.S. | Velshi & Ruhle | MSNBC [Video]. YouTube.https://www.youtube.com/watch?v=W5DCEuK94tc