If an industry is in long-run competitive equilibrium and experiences a decrease in demand, then as a result the equilibrium price will __________, which will cause the representative firm's __________ curve to shift downward and some firms will __________ the industry.

Question

Quizplus · Accepted Answer

In a long-run competitive equilibrium, a decrease in demand leads to a lower equilibrium price, causing a firm's demand curve to shift downward. This results in reduced profitability for some firms, prompting them to exit the industry.

If an Industry Is in Long-Run Competitive Equilibrium and Experiences