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Figure: Game-Day Shirts
-(Figure: Game-Day Shirts) Rick is one of 10 vendors who sell game-day T-shirts at football games in a perfectly competitive market. His costs are identical to the costs of the other 9 vendors. If the industry is in long-run equilibrium, how many shirts will each vendor sell?

Question

Use the following to answer questions:
Figure: Game-Day Shirts 
-(Figure: Game-Day Shirts) Rick is one of 10 vendors who sell game-day T-shirts at football games in a perfectly competitive market. His costs are identical to the costs of the other 9 vendors. If the industry is in long-run equilibrium, how many shirts will each vendor sell?

Quizplus · Accepted Answer

In long-run equilibrium, each vendor will sell the quantity at which price equals marginal cost. Since all vendors have identical costs, they will all sell the same quantity. The total quantity sold in the market will be 10 times the quantity sold by each vendor. Since the market is in equilibrium, the total quantity sold will be equal to the quantity demanded. The demand curve is downward sloping, so the price will be lower if the quantity sold is higher. Therefore, the quantity sold by each vendor will be less than 24. The only answer choice that is less than 24 is C, 22.

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