This graph shows an increase in demand for a good produced in a perfectly competitive industry. Whatever the specific event that caused demand to increase, the industry is no longer in equilibrium as a result of the change.

   Demand has increased to D₂, causing market price to increase to P₂. Because price is higher, firms increase output to Q₂. Since industry supply is just the sum of firm supply, industry output increases as well to Q₂ on the industry graph. All this takes place in the short run.

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