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Even though we showed the industry supply curve with a kink on the previous graph, for simplicity we will
usually just illustrate it with a straight line.
Suppose the graph to the right illustrates a market in which
the industry is made up of several firms. What happens to the
industry supply curve when one or more firms goes out of business, or "exits"
the industry? The answer is that the supply curve shifts back;
less is supplied at every price.
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