In the long run, firms will enter the industry due to the profits being earned. Entry will continue until profits are zero, meaning supply will shift to S₃. Once enough firms have entered to shift supply to this point market price is reduced to P₃, equal to minimum ATC.

   The new long run equilibrium differs from the old in that there are more firms; therefore, industry output is larger and price and production costs are lower. As always, long run equilibrium price in perfect competition is determined by the minimum ATC.

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