Question

When a firm leaves a perfectly competitive industry, Group of answer choices

the individual demand curves facing remaining firms shift towards the point of minimum average cost in the long run.

the short-run industry supply curve shifts to the right.

at the new long-run equilibrium, the remaining firms in the industry will each receive a higher profit.

short-run industry equilibrium is re-established at a new point along the original short-run industry supply curve.

Answer 1

When a firm leave the industry the individual demand curve facing remaining firms shift towards the point of minimum average cost in long run. Because when a firm in perfectly competitive industry leaves the industry it means firms in the industry are facing losses and average total cost is higher the price line. After leaving the industry demand curve or price line curve of remaining firms will shift upward towards the average cost curve. In long run all the firms earns only normal profit not higher profit and supply curve of industry could shift left not right.

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