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Assume that the most efficient production technology available for making vitamin pills has the cost structure given in the following table. Note that output is measured as the number of bottles of vitamins produced per day and that costs include a normal profit. a. What is ATC per unit for each level of output listed in the table? Instructions: Round your answers to 2 decimal places. b. Is this a decreasing-cost industry? c. Suppose that the market price for a bottle of vitamins is $2.51 and that at that price the total market quantity demanded is 82, 610,000 bottles. How many firms will there be in this industry? __________ firm(s). d. Suppose that, instead, the market quantity demanded at a price of $2.51 is only 75, 100. How many firms do you expect there to be in this industry? ________ firm(s). e. Review your answers to parts b, c, and d. Does the level of demand determine this industry's market structure?

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a. ATC per unit for each level of output listed in the table:

Output | Cost      | ATC

500      | $5,500 | 11.00

1,000    | $7,500    | 7.50

2,000   | $9,500   | 4.75

b. Yes, this is a decreasing-cost industry.

c. If the market price for a bottle of vitamins is $2.51 and the total market quantity demanded is 82,610,000 bottles, there will be 33 firms in this industry.

d. If the market quantity demanded at a price of $2.51 is only 75,100, then there will be 12 firms in this industry.

e. Yes, the level of demand does determine this industry's market structure. The higher the demand, the more firms that will enter the market, and the lower the demand, the fewer firms that will enter the market.

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