In the city of Los Locos, marijuana producers have a marginalcost of $10 per ounce for growing expenses. Under the current lawit is illegal to sell marijuana. The city police seize 20% of allmarijuana grown and impose a fine of $20 per ounce. Los Locos isconsidering legalizing marijuana, and wants to impose a tax thatwould leave total consumption unchanged. The city should impose atax of
100%? 50%? 150%? 25%? 75%?
