Narrbegin Exhibit 7.10 Long-run perfectly competitive industry
-Refer to Exhibit 7.10 and 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

Narrbegin Exhibit 7.10 Long-run perfectly competitive industry

-Refer to Exhibit 7.10 and 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 price and quantity both increase, resulting in firms earning positive economic profits. This attracts new firms to enter the industry, shifting the long-run supply curve to the right. The new long-run equilibrium occurs at point C, where the new demand curve intersects the shifted long-run supply curve. Therefore, the long-run supply curve is drawn from point A to point C.