Suppose the competitive market for cat toys is in short-run equilibrium. The following graph on the left shows the demand and short-run supply for cat toys. Assume every firm in this industry is identical. The graph on the right shows the marginal cost (MC) and average cost (AC) curves for each firm in the long run. Short-Run Market Individual Firm 10 10 Supply Co COST (Dollars per cat toy) PRICE (Dollars per cat toy) AC N N MC Demand 0 10 20 30 40 50 60 70 80 90 100 0 1 2 3 4 5 6 7 8 9 1 QUANTITY (Thousands of cat toys per vear) OUTPUT (Hundreds of cat tovs per vear)In the short run, the equilibrium market price is $2.00 per cat toy. At this price, each firm would earn profit in the long run. Therefore, firms will * the industry when moving from the short run to the long run until the equilibrium market price is $ per cat toy. On the following graph, use the orange line (square symbol) to graph the long-run supply curve for cat toys in this industry. 10 Long-Run Supply 6 5 PRICE (Dollars per cat toy) 1 Demand 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of cat toys per year)