Firms enter because the industry is now profitable. Entry continues until profit falls to zero, or until market price equals minimum ATC. This is shown as a shift to S2 and a market price of P2

   Now that the price has dropped, individual firms are producing less than before (Q2). However, total industry output has increased (Q2 on the industry graph) due to the entry of new firms. The new long run equilibrium price is lower.

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