Calculate new equilibrium price

Reference no: EM1369967

Assume that initially the price is $50 in a perfectly competitive market. Company are making zero economic profits. Then the market demand shrinks permanently and some firms leave the industry and the industry returns back to a long run equilibrium. What will be the new equilibrium price, assuming cost conditions in the industry remain constant?

a. $50.
b. $45.
c. Lower than $50 but exact value cannot be known without more information.
d. Larger than $45 but exact value cannot be known without more information.

Reference no: EM1369967

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