HCI 2024 Prelims

A cup of coffee can be priced as low as $1 in a neighbourhood coffee stall or as much as $6 in a café like Starbucks. The growing demand for specialty coffee has prompted new cafés to enter the already crowded market despite rising labour costs.

a) Explain which market structure best fits the market for coffee in Singapore, and why a café charges higher price for coffee than a neighbourhood coffee stall. [10]