As firms exit the industry supply shifts back. If supply shifts back to S₂ price will increase to P₂. Output for each firm increases to Q₂ on the firm graph. However, industry output falls (due to exit) to P₂ on the industry graph.

   Even though exit increases price to P₂, if firms are still suffering losses as shown, exit will continue. The industry still isn't in long run equilibrium.

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