Each time the price rises, new firms will enter until the equilibrium price returns
to P1. This means that, in the long run this industry will supply whatever amount is demanded at price
P1. Thus, the long run supply curve is LRS, the horizontal, or infinitely elastic supply curve shown.
For LRS to be horizontal, however, requires a crucial assumption, that
production costs of the firms don't change due to a change in
the size of the industry. There are two other possibilities.
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