Long run equilibrium

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Consider a perfectly competitive market in long-run equilibrium where all firms operate under the same cost conditions. Suppose a new technology becomes available which reduces marginal production costs. Explain graphically and verbally what happens to the market in the short run and in the new long run equilibrium if factor prices and demand are assumed to remain the same as before.

Hint: You have to use two parallel diagrams, one for an individual (representative) firm and one for the industry.

Reference no: EM13110409

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