Question

firm supply curves
price quantity- firm 1 quantity- firm 2
$1 1,000 4,000
$2 1,350 4,350
$3 1,700 4,700
$4 2,050 5,050
$5 2,400 5,400
$6 2,750 5,750
$7 3,100 6,100
$8 3,450 6,450
a. a third firm would mean,
o higher prices of stuffed animals.
o firm 1 and firm 2 would lower output to accommodate the new supplier in order to keep market supply constant.
o market supply decreases.
o market supply increases.
b. with two firms in the market, the market quantity supplied at $6 is:
stuffed animals

Explanation:

Step1: Analyze impact of new firm

In a market, more firms generally increase supply. So when a third firm enters, market supply increases.

Step2: Calculate market - quantity supplied at $6

From the table, at a price of $6, Firm 1 supplies 2,750 and Firm 2 supplies 5,750. Add these quantities together.
$2750 + 5750=8500$

Answer:

a. market supply increases.
b. 8500