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Unformatted text preview: exit of existing firms o S will shift left to S 1 for the industry o Output will fall from Q 1 to Q 2 for the industry o Equilibrium is restored at P and Q 2 in the o long-run (point 3) o For the firm price rises to P and output returns to q o So, output falls for the industry but rises for the firm because now there are less firms in the industry and existing firms produce more o Long run equilibrium is restored at point 3...
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- Fall '09
- Perfect Competition, long run equilibrium, perfectly competitive firm, industry output, industry demand curve, longrun equilibrium