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The following graph shows the daily market for small cardboard boxes in Houston.

The following graph shows the daily market for small cardboard boxes in Houston.

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Suppose that Talero is one of more than a hundred competitive firms in Houston that produce such cardboard boxes. 

Based on the preceding graph showing the daily market demand and supply curves, the price Talero must take as given is _______ .

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Answer #1

Market for small cardboard boxes in Houston is a perfectly competitive market.

In case of perfectly competitive market, firm is a price taker and it accepts the price as decided by the market taking into account the market demand and market supply.

The given figure shows that the market supply curve and the market demand curve are intersecting each other corresponding to price of $5 per small box.

So,

The price decided by the market is $5 per small box.

Each competitive firm has to accept this price.

Talero is a competitive firm.

So,

Based on the preceding graph showing the daily market demand and supply curves, the price Talero must take as given is $5.

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