Figure 12-10
-Refer to Figure 12-10.Consider a typical firm in a perfectly competitive industry which is incurring short-run losses.Which of the diagrams in the figure shows the effect on the industry as it transitions to a long-run equilibrium?

Question

Figure 12-10 
-Refer to Figure 12-10.Consider a typical firm in a perfectly competitive industry which is incurring short-run losses.Which of the diagrams in the figure shows the effect on the industry as it transitions to a long-run equilibrium?

Quizplus · Accepted Answer

In the long run, firms will exit the industry, reducing the supply and increasing the price. This is shown in Panel A, where the supply curve shifts to the left and the price increases.

Figure 12-10 -Refer to Figure 12-10.Consider a Typical Firm in a Perfectly