New long run equilibrium point

New long run equilibrium point - Its total revenue and...

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New long run equilibrium point It will continue to slide until it becomes tangential to LAC at point e 1 as seen in Figure 51. This is a new long run equilibrium point . Market share demand curve also shifts to the left from DD to D1D1 and passes through point e1. In this new equilibrium position the firm sells a smaller output Q1 at a lower price P1.
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Unformatted text preview: Its total revenue and total cost are both equal and of the size OQ1e1P1. Thus extra profits have been competed with. Still this may not be a stable equilibrium solution because individual firms are free to undertake fresh rounds of product differentiation. This may renew the whole process....
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New long run equilibrium point - Its total revenue and...

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