1.(25 Points) Supply and demand: Sugar cane is the primary component of rum. Suppose that a hurricane destroys the sugar cane crop for a given year leaving little to no sugar available for rum manufacturers. Using this information, answer the following questions.

a.Other things constant, what will happen to the price of sugar cane? Why does the price increase or decrease?

b.Explain how this will also impact the market for rum? (i.e., explain what will happen to the equilibrium price and quantity for rum). Will the supply and/or demand curves shift in this scenario? Which direction will they shift?

c.Given the changes you outlined in part B above, what would you expect to happen in the market for whiskey? (i.e., explain what will happen to the equilibrium price and quantity for whiskey). Will the supply and/or demand curves shift in this scenario? Which direction will they shift?