If the long-run response of this industry to a shift in the demand schedule to Demand₁ is to increase supply out to Supply₁,then compared to its initial position,a typical firm in long-run equilibrium

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In the long run, firms in a perfectly competitive market will adjust their production to the new equilibrium point where the quantity supplied meets the new quantity demanded at the market-clearing price. At this new equilibrium point, the typical firm will experience no economic profit and will operate at its minimum efficient scale, meaning that its average cost is unchanged from the initial position. The shift in the demand schedule does not directly affect the firm's costs of production, so the firm's marginal cost should remain the same as before. Finally, the price for the product may or may not have risen depending on the magnitude of the shift in demand and other market factors.

If the Long-Run Response of This Industry to a Shift