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 California, there are seven bathing suit stores that provide service to beach-going customers

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 California, there are seven bathing suit stores that provide service to beach-going customers. Each of the stores vigorously competes with each other and they are faced with the same schedule of costs. Additionally, each of the stores faces an identical bathing suit demand curve in the Santa Barbara market. Swim N Style is a typical store out of those seven and it faces the following demand and cost schedule.

A recent marketing survey shows that Santa Barbara exhibits a high growth in bathing suit market. Consequently, seventeen new bathing suit stores now enter the market, joining the seven that already existed. Therefore, the demand schedule facing Swim N Style (and all other stores) falls, while the cost schedules for both old and new stores remain constant. The following represents the new demand schedule.

UPDATED DEMAND SCHEDULE

QUESTION: Suppose the number of swimsuits sold remained constant under the increased competition, but the number of stores was reduced so that each was operating at its point of minimum average cost. How many stores would now be in operation? Why? Show the detailed calculations and explain the reason.