suppose marijuana legalized in usa .what will happe to the quantity of marijuana (i.e purchased and sold )if the demand of marijuana rises by more then the supply of marijuana falls (hear Demand curve is shifting left)
If the demand for marijuana rises by more than the supply of marijuana falls, it would imply that there is an increase in the quantity demanded and a decrease in the quantity supplied. This situation typically leads to an increase in the equilibrium price and uncertain changes in the equilibrium quantity.
To understand this concept better, we need to look at the basics of supply and demand:
1. Demand Curve: The demand curve shows the quantity of a good that consumers are willing to buy at a given price. It typically has a negative slope, meaning that as the price increases, the quantity demanded decreases, and vice versa.
2. Supply Curve: The supply curve shows the quantity of a good that producers are willing to sell at a given price. It usually has a positive slope, meaning that as the price increases, the quantity supplied also increases.
Now, in your scenario where marijuana is legalized and the demand for marijuana rises (demand curve shifting to the right), it suggests that consumers are willing to buy more marijuana at each price level. This increase in demand could be due to various factors, such as increased social acceptance or new medical applications.
However, if the supply of marijuana falls (supply curve shifting to the left), it means that producers are willing to sell less marijuana at each price level. This decrease in supply could be due to factors like stricter regulations, limited production capabilities, or scarcity of resources required for cultivation.
When the demand curve shifts to the right and the supply curve shifts to the left, the equilibrium point (the point where quantity demanded equals quantity supplied) will change. The new equilibrium price of marijuana will likely increase, given the increased demand and limited supply. However, the change in the equilibrium quantity is uncertain and would depend on the magnitude of the shifts in demand and supply.
In summary, if the demand for marijuana rises by more than the supply of marijuana falls (demand curve shifting to the right and supply curve shifting to the left), it would likely result in an increase in the equilibrium price of marijuana and uncertain changes in the equilibrium quantity.