Wright State Marijuana Market and Types of Demand Curves Questions Due date: 11:59 PM Nov 17-Sunday. For the questions 3 and 4, use the excel file “For wri

Wright State Marijuana Market and Types of Demand Curves Questions Due date: 11:59 PM Nov 17-Sunday. For the questions 3 and 4, use the excel file “For writing HW 10 – U.S. real GDP” uploaded in the
Excel module on Pilot.
3. Duplicate the Figure 13-1 of lecture note 13 (U.S real GDP with trend-line). (10pts)
Note-1: In order to draw the trend-line, follow the guidance on “How to draw the trend-line of Figure 13-
1 Real GDP.pdf” uploaded in the Excel module of Pilot.
Note-2: The range for the vertical-y line should be 6 to 18. Writing HW 10
Due date: 11:59 PM Nov 17-Sunday.
For the question 1, you can turn in on Nov 19 (Tuesday) before the class starts.
Please upload your homework to the dropbox in the “Homework” module in Pilot.
1. Below is the Marijuana market depending on types of demand curves.
Marijuana mark
Inelastic demand
Elastic demand
Price
Price
S0 (social cost)
S0 (Social cost)
Quantity
Quantity
1) Briefly explain why Marijuana generates negative externalities. (10pts)
2) There are two types of drug users: recreational drug users and addicted drug users. Which one has
an inelastic demand curve? And why? (10pts)
3) Draw inelastic and elastic demand curves on each diagram. (4pts)
4) The government imposes taxes by the amount of the external costs. Draw social cost curve on each
diagram. (4pts)
5) Based on the graphs in (4), which one (inelastic demand vs. elastic demand) will be more affected
by a tax on Marijuana? Explain in terms of the change in the quantity and the price. (10pts)
2. Article: “Free Distribution or cost-sharing? Evidence from a randomized Malaria prevention
experiment” (Quarterly Journal of Economics, 2010) by Cohen and Dupas, which is uploaded in
“Articles” module on Pilot.
1
In this paper, the authors tested whether health products with positive externalities should be
subsidized or not. Particularly, they used Malaria insecticide-tested bed nets in Kenya
Read the parts listed below.

The first two sentences in the second paragraph of page 3: “This paper estimates the first three
parameters” through “a large enough share of users in their vicinity:

The first sentence in the third paragraph of page 10 including footnote 6: “Proponents of full
subsidization argue that…”

The first paragraph in the section of “II. A sample model of Pigouvian subsidies” on page 6:
“This section develops a simple model to highlight the parameters that must be identified……”
Answer those two questions below.
1) Explain why the usage of bed nets can generate positive health externalities. (10pts)
2) Even if the government distributes anti-Malarial bed nets free of charge, in some cases those nets
will not generate positive health externalities. Discuss such cases. (10pts)
For the questions 3 and 4, use the excel file “For writing HW 10 – U.S. real GDP” uploaded in the
Excel module on Pilot.
3. Duplicate the Figure 13-1 of lecture note 13 (U.S real GDP with trend-line). (10pts)
Note-1: In order to draw the trend-line, follow the guidance on “How to draw the trend-line of Figure 131 Real GDP.pdf” uploaded in the Excel module of Pilot.
Note-2: The range for the vertical-y line should be 6 to 18.
4. U.S. GDP growth rate.
1) Fill the Column-C. (5pts)
Use the formula below:
GDP growth rate =
2 − 1
× 100
1
2) Duplicate the figure 13-2 of note 13. (5pts)
2
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Real GDP (trillions $) GDP growth rate
8.8
9.0
8.9
9.3
9.5
9.9
10.2
10.6
11.0
11.5
12.1
12.6
12.7
12.9
13.3
13.8
14.2
14.6
14.9
14.8
14.4
14.8
15.0
15.4
15.6
16.0
16.5
16.7
17.1

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