In each of these figures, we have assumed that in the initial situation, the price of the product is p, and at this price, the competitive firm is in short-run as well as in long- run equilibrium at the point E 1 (p 1, q 1), and producing an output of q 1, in part (a) of each of these figures, and so, the industry also is in long-run equilibrium.Į 1 is the minimum point of the LAC 1 and the SAC 1 curves of the firm where the AR 1 = MR 1 line has touched these two curves, and here the firm is earning only normal profit, since we have LAC = SAC = AR = p. ![]() ![]() We shall derive the industry’s long run supply curves in the above three cases with the help of Figs. (III) The LRS curve of a constant cost industry.
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