As we can see from the graph, the new long run equilibrium differs from the old in that there are fewer firms and price is higher as would always be the case when variable costs increase. 18. Finally, in comparing the new long run equilibrium with the initial long run equilibrium we would observe the following changes in the plastic knob industry.

1. fewer firms, higher price.
2. fewer firms, same price. This would be the result of a demand decrease.
3. fewer firms, lower price. This would only occur as the result of a demand decrease in an industry with an upward sloping long run supply curve.
4. more firms, same price. This would be the result of a demand increase.
5. more firms, higher price. This would only occur as the result of a demand increase in an industry with an upward sloping long run supply curve.

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