Suppose that the entry of new firms causes the costs of firms to rise. The new firms may, for example, increase the demand for a particular type of skilled worker, driving up wages. A typical firm’s new (higher) set of cost curves is shown in Figure 10-8(b). The new long-run equilibrium price for the industry is P3 (here P = MC = AC), and at this price Q3 is demanded. We now have two points (p1, Q1 and P3, Q3) on the long-run supply curve.5 All other points on the demand curve. These shifts would tract out the long-run supply curve LS. Here, LS has a positive slope because of increasing costs associated with the entry of new firms. This positive slope is caused by whatever causes firms’ cost to rise in response to entry.6 Still, because the supply response is more flexible in the long run, the LS curve is somewhat flatter than is short-run counterpart.