PART I: Short Answer Students are required to show ALL workings to be awarded the full marks for each question. Question 1 (24 marks) (i) (a) 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. (2 marks) 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. (6 marks) 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. (ii) (iii) (5 marks) (b) Identify a newspaper article that illustrates a market failure in your assigned Caribbean country. Ensure that you provide a screenshot of the article in your submission. The screenshot should include the name of the publication, date of publication and name of the article. NOTE: Only the following market failures should be examined: public good, asymmetric information, positive or negative externality. (i) Identify the type of market failure being discussed in the article and discuss why market failure occurs in this scenario. (3 marks) (ii) 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. (Maximum 30 words) (4 marks) (iii) Carefully explain how the imposition of the chosen government policy impact consumer surplus, producer surplus and total surplus in this scenario. (Maximum 30 words) (4 marks) Diagrams are not required for Q1B Parts (ii) and (iii) No marks will be awarded for Q1B Part (i) if the article does not represent a market failure or it does not represent one of the three required market failures. It is still possible to be awarded partial marks for Q1B Parts (ii) and (iii) even if no marks are awarded for Q1B Part (i).