Assume that the markets for sugar cane, rum and whiskey are initially in equilibrium. Sugar cane is a principal ingredient in rum, but it is not an ingredient in whiskey. Rum and whiskey are substitutes in consumption. The government implements a price restriction in the sugar cane market with the aim of protecting the farmers. What type of price restriction is implemented by the government? Explain. Discuss the effect on each market if the government implements a price restriction in the sugar cane market with the aim of protecting the farmers. Illustrate the effect on each market if the government implements a price restriction in the sugar cane market with the aim of protecting the farmers.
1. Assume that the markets for sugar cane, rum and whiskey are initially in equilibrium.
Sugar cane is a principal ingredient in rum, but it is not an ingredient in whiskey.
Rum and whiskey are substitutes in consumption. The government implements a
What type of price restriction is implemented by the government? Explain.
Discuss the effect on each market if the government implements a price
restriction in the sugar cane market with the aim of protecting the farmers.
Illustrate the effect on each market if the government implements a price
restriction in the sugar cane market with the aim of protecting the farmers.
2. Covid-19 has impacted the tourism market of a developing country in the caribbean, this type of market failure is a Negative externality.
Discuss why market failure occurs in this scenario.
Suggest a relevant government policy that would yield the efficient outcome and
carefully explain the process through which the implementation of the government
policy will lead to the optimal outcome.
Carefully explain how the imposition of the chosen government policy impact
consumer
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