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.

Question 1 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.

Question 2

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 (Question 1)? Discuss.