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Unformatted text preview: b. In the long run, new firms enter the market, reflected by a shift in the supply curve to the right. Since it is a constant-cost industry, sufficient firms enter the market (the supply curve shifts sufficiently to the right) so that equilibrium price returns to $60 a bushel. The representative firm returns to earning zero economic profit and selling 500 bushels. There are, however, more firms in the market, so the market output increases....
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This note was uploaded on 11/04/2009 for the course ECON 201 taught by Professor Williams during the Fall '08 term at UVA.
- Fall '08