Of this point does not change as new firms enter or leave a market. Consequently, only one price can prevail in the long run, regardless of how demand shifts, so long as input price do not change. The long-run supply curve is horizontal at this price.
One the constant cost assumption is abandoned, this need not be the case. If the entry of new firms cause average cost to rise, the long-run supply curve has an upward slope. On the other hand, if entry causes average costs to decline, it is even possible for the long-run supply curve to be negatively sloped. We now dis cuss these possibilities.
Of this point does not change as new firms enter or leave a market. Consequently, only one price can prevail in the long run, regardless of how demand shifts, so long as input price do not change. The long-run supply curve is horizontal at this price.One the constant cost assumption is abandoned, this need not be the case. If the entry of new firms cause average cost to rise, the long-run supply curve has an upward slope. On the other hand, if entry causes average costs to decline, it is even possible for the long-run supply curve to be negatively sloped. We now dis cuss these possibilities.
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