The table below shows the market demand schedule for toys and the graph shows th

Question

The table below shows the market demand schedule for toys and the graph shows the short-run cost curbes of a toy producer. There are 1,000 identical toy producers.

The table below shows the market demand schedule for tovs and the graph shows the short-run cost curves of a toy producer. There are 1,000 identical toy producers. Price and cost (dollars per toy) 27 24 MC Price (dollars per toy) 24 Quantity demanded (thousands of toys per week) 1,000 1,500 2,000 2,500 3,000 21 18 ATC 18 12 AVC 15 The firm will shut down temporarily if the market price is below $per toy. 12 he market price of a toy in long-run equilibrium is $ When the market is in long-run equilibrium, there will be firms. 1000 500 2000 2500 Quantity (toys per week) 500 >Answer with a whole number.

Explanation / Answer

Answer to blank 1: $12

Explanation: The firm will shut down if price falls below AVC

Answer to blank 2: $15

Explanation: The condition for long run equilibrium is: P = MC = ATC. This condition is fulfilled at price of $15.

Answer to blank 3: 100

Explanation: No. of firms = Quandity Demanded at $15 / MC = 1500 / 15 = 100 firms

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