Exhibit 8-19 Long-run perfectly competitive industry
-As shown in Exhibit 8-19, assume that a perfectly competitive industry is in long-run equilibrium at point A and the demand curve shifts from D₁ to D₂. The result is a long-run supply curve drawn from point:

Question

Exhibit 8-19 Long-run perfectly competitive industry

-As shown in Exhibit 8-19, assume that a perfectly competitive industry is in long-run equilibrium at point A and the demand curve shifts from D₁ to D₂. The result is a long-run supply curve drawn from point:

Quizplus · Accepted Answer

When the demand curve shifts from D₁ to D₂, the market price increases, and firms earn economic profits in the short-run. In the long-run, the industry supply curve shifts to the right as new firms enter the market, causing the price to decrease to its original level. The long-run equilibrium occurs at point C, where the new industry supply curve intersects with the new demand curve D₂. Therefore, the long-run supply curve is drawn from point A to point C.

Exhibit 8-19 Long-Run Perfectly Competitive Industry