Problem
In 2009, the voters of Oakland, California, passed a measure to tax medical cannabis (marijuana), effectively legalizing it. In 2010, the City Council adopted regulations permitting industrial-scale marijuana farms with no size limits but requiring each to pay a $211,000 per year fee (Matthai Kuruvila, "Oakland Allows Industrial-Scale Marijuana Farms," San Francisco Chronicle, July 21, 2010; Malia Wollan, "Oakland, Seeking Financial Lift, Approves Giant Marijuana Farms," New York Times, July 21, 2010). One proposal calls for a 100,000 square feet farm, the size of two football fields. Prior to this legalization, only individuals could grow marijuana. These small farmers complained bitterly, arguing that the large firms would drive them out of the industry they helped to build due to economies of scale. Draw a figure to illustrate the situation. Under what conditions (such as relative costs, position of the demand curve, number of low-cost firms) will the smaller, highercost growers be driven out of business?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.