Sugar can be produced from a variety of plants. In tropical countries it is frequently derived from sugarcane. In the U.S. it is largely extracted from sugarbeets. As part of a program of economic pressure against Cuba, the U.S. has for years placed large tariff (import tax) on sugar from Cuba. some consideration is presently being given to removing this tax. Using supply and demand diagrams

A.Show the effect of such a relaxation of sanctions on the market for U.S. sugarbeets.
B. Show the effect of this move on the market for Hershey candy bars, which are produced in Hershey, PA

beet sugar and cane sugar are near perfect substitutes, ergo:
P(beet sugar) = P(cane sugar) = P(all sugar). P means price.

What happens to the supply curve for sugar with the lowered tariffs? Sugar is an input to candy. What happens to the supply curve for candy?

To analyze the effects of the relaxation of sanctions on the market for U.S. sugarbeets and Hershey candy bars, we can use supply and demand diagrams.

A. Effect on the Market for U.S. Sugarbeets:
1. In the market for U.S. sugarbeets, the lowered tariffs on Cuban sugar would increase the supply of sugar in the U.S. market.
2. The supply curve for U.S. sugarbeets would shift to the right since there would be more sugar available due to the increased imports from Cuba.
3. This increase in supply would result in a lower equilibrium price of sugarbeets.
4. As beet sugar and cane sugar are considered near perfect substitutes, the price of cane sugar would also decline due to the increased availability of sugar in the market.
5. Hence, the supply curve for U.S. sugarbeets and cane sugar would shift to the right, leading to a decrease in their respective prices.

B. Effect on the Market for Hershey Candy Bars:
1. Sugar is an input in the production of candy, including Hershey candy bars. A decrease in the price of sugar would decrease the production costs for candy manufacturers like Hershey.
2. The decrease in production costs would lead to an increase in the supply of Hershey candy bars.
3. The supply curve for Hershey candy bars would shift to the right, indicating an increase in the quantity of candy bars available at various price levels.
4. This increase in supply would result in a lower equilibrium price of Hershey candy bars.

In summary, the relaxation of sanctions and lowered tariffs on Cuban sugar would increase the supply of sugar in the U.S., reducing the price of both U.S. sugarbeets and cane sugar. Consequently, the lowered production costs for candy manufacturers would lead to an increase in the supply and a decrease in the price of Hershey candy bars.