In the long run supply must shift back to S₃. At that point market price is P₃ and firms are earning zero profits again. Thus, there is no further incentive for exit and a new long run equilibrium is established.

   In the long run the equilibrium price is determined by cost. Since cost rose, equilibrium price rose to P₃. Individual firms who remained in the industry are producing Q₃. Total industry output has fallen considerably, however, as firms exited.

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