Consider the tofu (a common food made from soy bean) market which is perfectly competitive and assume that the market is at the long run equilibrium.

1. (a)Examine the cost structure and demand faced by an individual perfectly competitive tofu farmer. Relate that farmer to the tofu market at the perfectly competitive long-run equilibrium. Support your discussion with suitable diagrams for the tofu market and the individual tofu farmer.
2. (10 marks)
3. (b)Analyse the effects of the following news on price and quantity in the tofu market as well as the profit and output of an individual tofu farmer:
4. "It is discovered that tofu is health-enhancing".
5. Explain these effects in both the short run and the long run equilibria and

support your answers with suitable diagrams.

(10 marks)

(c) Briefly discuss an example from the consumer market in Singapore where the short run equilibrium differs from the long-run equilibrium. You do not need to provide any diagrams; your answer will be assessed based on the quality of the argument.

(Hint: Think about cases of short-run demand or supply shocks, and how the

market responded to these shocks.)