Answer should include figures and tables.

In a fishing village, there are many producers producing dried shrimp. The dried shrimps are identical and each producer has only a small market share with no control over the price. Hence the dried shrimp market can be considered perfectly competitive.

(a) Initially the dried shrimp market is at its long run equilibrium. Examine this situation with suitable diagrams of the dried shrimp market and a representative producer of dried shrimp. Discuss the characteristics of the producer at the long run equilibrium. (10 marks)

(b) There is a well-reputed medical report suggesting that eating dried shrimp may cause a harmful disease. Appraise the effect of this report on the dried shrimp market and a representative producer of dried shrimp in the short run equilibrium. Support your answers with suitable diagrams of the dried shrimp market and a representative producer of dried shrimp. (20 marks)

(c) What will happen to the dried shrimp market and the representative producer's profit and output in the long run? Examine with suitable diagrams of the dried shrimp market and a representative producer of dried shrimp. How does this long run equilibrium differ from (a)? Discuss. (20 marks)