1. Consider three markets. These markets are for oranges, oranges juice and vodka. In this question these markets are related as follows. Oranges are an input for orange juice production. Orange juice and vodka are complements. In this question these markets are not related in any way other than is stated above. Suppose that an improvement in technology makes vodka less costly to produce. To answer this question, draw three demand and supply diagrams (as specified below). For each diagram you must label which market it refers to, show clearly how the demand or supply curve shifts, and clearly show how the equilibrium price and quantity changes. For each diagram you must provide a short explanation.

(a) First, draw a diagram showing what happens in the vodka market (10 marks).

(b) Then, draw another diagram showing what happens in the orange juice market (20 marks).

(c) Then, draw another diagram showing what happens in the orange market (20 marks).