Refer to the above graphs.What will happen in the long run to industry supply and the equilibrium price of the product?

Question

Quizplus · Accepted Answer

As the industry experiences negative economic profit, some firms will exit the industry which will decrease industry supply (S). As supply decreases, the equilibrium price (P) will increase until a new equilibrium point is reached with a lower quantity demanded and supplied but at a higher price. Therefore, S will decrease and P will increase in the long run.

Refer to the Above Graphs