When a firm exits an industry, the remaining firm finds that more of its product is demanded at every price and that demand becomes more inelastic (since there are fewer substitutes). Only demand curve D₃ illustrates greater demand at every price as well as more elastic demand.

  

9. Again using the demand curves shown in Figure 2, if D is the demand curve for one of two firms in an industry, which demand curve represents the one that it will face if it is able to force the other firm to leave the industry by winning a patent infringement suit against the other firm.

1. D₁ Less is demanded at lower prices, not a plausible outcome from exit.
2. D₂ Less is demanded at higher prices, not a plausible outcome from exit.
3. D₃
4. D₄ Less is demanded at every price, not a plausible outcome from exit.
5. D₅ Less is demanded at every price, not a plausible outcome from exit.

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