Hello,

The question I have is:

Suppose that the tofu market is perfectly competitive and

Omega is one of the many tofu producers in the market.

(a)

Initially the tofu market is in a long-run equilibrium.

Draw a diagram for the tofu market and a diagram for

Omega to explain the long run equilibrium situation.

(b) Omega discovers a method to significantly reduce both

the fixed costs and the variable costs of tofu production. How will this discovery affect Omega and the tofu market in

the short run? Explain with suitable diagrams for the tofu market and Omega, and then

describe what will happen at the tofu market in the long run.

Thank you in advance for your help!