If firms in a competitive industry are suffering economic losses, then one would expect that in the long run,
◦ the supply curve for the product will shift to the left as firms leave the industry, causing industry output to fall and price to rise.
◦ the supply curve for the product will shift to the right as individual firms lower their prices to increase their sales.
◦ there would be no change in the number of firms in the industry as long as firms are covering their average variable costs.
◦ the demand curve for the product will shift to the left, causing equilibrium output and price to decline.
◦ each firm would raise its price until it was breaking even.
long bone
Economic recession in 2008 saw a small decrease in demand
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