Article Summary Monthly Marijuana Sales in Colorado Topped $100 Million for the for the First

question 33

Multiple Choice

Article Summary
Monthly marijuana sales in Colorado topped $100 million for the first time in August,2015,with $59.2 million in recreational sales and $41.4 million in medical sales.Colorado has levied three types of state taxes on recreational-use marijuana: a 2.9% standard sales tax,a 10% special marijuana sales tax,and a 15% excise tax on wholesale marijuana transfers.The 15% excise tax is earmarked for school construction projects.In August,recreational-use taxes and fees totaled $11.2 million and medical taxes and fees were $2 million,bringing total revenue-to-date for the year to over $86 million.
-Refer to the Article Summary.Colorado taxes marijuana with a 12.9% sales tax on buyers and a 15% wholesale excise tax on producers,which equates to 46 percent of the total taxes paid by retail buyers and 54 percent paid by producers.Does this necessarily mean that buyers will bear 46 percent of the burden of the tax and producers will bear 56 percent of the burden?

• A)Yes,the percentage of taxes paid by each group represents the burden of the tax.
• B)No,because consumers and producers always bear equal burdens of a tax.
• C)No,the burden of a tax is always 100 percent on the consumer.
• D)No,the burden of the tax will depend on the elasticity of demand and supply.

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Definitions:

Sunk Costs

Expenses that have been incurred and cannot be recovered, which should not impact future business decisions.

Barriers to Entry

Obstacles that make it difficult for new competitors to enter a market, including high startup costs, legal restrictions, and strong brand identity.

Research and Development

Activities undertaken by companies or organizations to innovate and introduce new products or processes.

Revenue

The total amount of money generated from the sale of goods or services, before deducting any expenses.