On 1 June 2022, Malaysia imposed a ban on chicken export. Singapore was heavily impacted as its national dish, Hainanese chicken rice, highly depends on fresh chicken supply from Malaysia. Note that we only focus on the domestic market in Singapore. Refer to the following links for more detailed descriptions of the chicken crisis in Singapore. These news articles will provide insights/information to help you explain and analyze the chicken crisis.

Question 1

Draw supply and demand diagrams to illustrate sequential changes in the domestic market for Hainanese chicken rice in Singapore. Explain how the impact caused changes in the market and how the market adjusted to a new equilibrium price and quantity after the change, using the diagram:

a. Many people rushed to buy the dish before the ban was imposed.

b. The ban was officially imposed on 1st June 2022 and many people (both vendors and consumers) believe the taste of Hainanese chicken rice will not be good if they use frozen chicken. ( Hainanese chicken rice is a dish of poached chicken and seasoned rice, served with chilli sauce and usually with cucumber garnishes)

c. After the ban, the Singaporean government has managed to source additional frozen chicken supply from Indonesia, Thailand and Australia. Vendors have also adjusted the recipe to account for the texture of frozen chickens.

Each of your diagrams must be fully labelled and digitized: both axes, all curves, all prices and quantities labelled on the axes and each equilibrium point. Each diagram must have a heading. Use letters such as P1 and Q1 or similar, rather than actual price and quantity numbers. A photo of hand drawn diagrams is not acceptable.

Question 2

a. How does the price elasticity of supply change as an immediate result of the ban on chicken export from Malaysia (in Question 1b)? Justify your answer. If there is a change in price elasticity of supply, how does this affect the supply curve you have drawn in Question 1

b. (No need to illustrate with a diagram).

b. How does the cross-price elasticity of demand for chicken alternative dishes with regard to the price of Hainanese chicken rice change?