Ii this firms level of output iii this firms atc

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(ii) this firm’s level of output? (iii) this firm’s ATC schedule? (iv) this firm’s level of profits? 2. There are 1,500 hot dog stands operating in Toronto. Each stand has the usual U-shaped average-total-cost curve. The market demand curve for hot dogs slopes downward and the market for hot dogs is in long-run equilibrium. (a) Draw the current equilibrium for the market and for an individual hot dog stand. (b) Toronto decides to restrict the number of hot dog stand licenses, reducing the number of hot dog stands from 1,500 to 500. What effect will this action have on (1) market price and (2) the profit of a hot dog stand that is still operating ? Use graphs to illustrate your answer. (c) The city decides to charge a license fee of $1,000 for the 500 licenses. In the short-run, what will be the impact on the number of hot dogs sold by an individual stand and on the stand’s profit? Illustrate your answer with an appropriate diagram.
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  • Spring '08
  • Abraham
  • Economics, shut down, representative, average variable cost, market price

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