Apple is reportedly “noodling with” a smaller 7.85-inch iPad model in its labs, according to John Gruber of Daring Fireball. Gruber revealed the information on an episode of The Talk Show after host Dan Benjamin asked if Apple was going to come out with a smaller tablet. “Well, I don’t know. What I do know is that they have one in the lab…a 7.85 inch iPad that runs at 1024×768… it’s just like the regular iPad shrunk down a bit,” Gruber said. “I’ve heard from multiple people that this is something that they’re kind of noodling with.” He went on to say that he has not heard anything regarding Apple’s plans to release the smaller model, and it is unclear if it will ever make it to market. Gruber speculated that Apple may have prepared the prototype in response to the Kindle Fire. He also suggested that it could possibly be unveiled at the Cupertino-based company’s Worldwide Developers Conference, since it’s unlikely that Apple will unveil a new iPhone at the event. We have seen numerous rumors regarding a smaller 7.85-inch iPad in the past. The slate is expected to be priced in the $249 to $299 range and could launch in the third quarter of 2012.