Question

When California voted on legalizing marijuana, which side would you think that California beer distributors were on? What about snack food vendors? Why?

Answer 1

Solution:

In economics, the monopoly is a situation in which a single firm or business earn abnormal profits and its growth is exponential with no competition from other firm.

If marijuana is legalized, demand for beer which is a substitute addictive good, will fall since a substitute product (marijuana) is (legally) available. So, beer distributors will oppose the move to legalize marijuana since lower demand for beer will lower revenue and profits.

Snack food vendors will likely remain unaffected since snack food is not a substitute of marijuana. Snack food vendors will remain indifferent regarding this move. But if snacks and marijuana are consumed together (if they are complements), then demand for snack foods will go up and snack food vendors will welcome the move

Beer distributers were against the legalization of marijuana. Because it would end their monopoly as a legalized multibillion dollar market of alcohol.("Marijuana would be an alternate way of getting high!")

While snack food vendors would gain 'indirectly’. Legalized marijuana wouldn't affect their monopoly, but it would be beneficiary for them.("Marijuana would make people eat more!")

Providing some alternatives are good in any sort of markets, even in the fast food market also it is acceptable. Even these firms has to think new and different, follow some different strategies to get benefit in long term.

These situations common in any business scenario, so it is better to find different ways to serve the customers.