Concept #1: Long Run Equilibrium
Practice: If the price is P1, the firms are
Practice: Suppose the cost curves apply to all firms in the industry. If the initial price is P1, in the long run, the market
Practice: A new study shows that eating raw garlic keeps vampires away (vampires have become a huge problem). This news shifts the demand curve for raw garlic to the right. In response, new firms enter the garlic market. While firms are entering the market, the price of raw garlic ____________ and the profit of each existing firm _____________.