Finally, we consider the adjustment of a perfectly competitive industry to an increase in fixed cost.

   Such an increase is shown as a shift up in the ATC curve. As before, there are no changes in the price or output behavior of the firm in the short run. As we will see, this is true for any industrial structure. If neither demand nor variable costs change, there is no reason for the firm to change its behavior. This is because P = MC is always profit maximizing, and neither of these has changed. (Recall, we can write either P = MC or MR = MC here. The condition MR = MC is always true, and for perfect competition MR = P.)

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