Suppose now that the market demand curve shifts outward to D’. If S is the relevant short-run supply curve, then in the short run, price rise to P2. The typical firm, in the short run, chooses a produce q2 and (because P2 > AC) earns profits on this level of output. In the long run, these profits attract new firms into the market. Because of the constant cost assumption, this entry of new firms has on effect on input prices. Perhaps this industry hires only a small fraction of the workers in an area and raises its capital in national markets. More inputs can therefore be hired without affecting any firms’ cost curves. New firms continue to enter the market until price is forced down to the level at which there are again no economic profits being made. The entry of new firms therefore shifts the short-run supply curve to S’, where the equilibrium price (p1) is reestablished. At this new long-run equilibrium, the price-quantity combination P1, Q3 prevails in the market. The typical firm again produces at output level q1, although now there are more firms than there were in the initial situation.