The graph to the right is a simple demand and supply graph. Here we are using it to illustrate a perfectly competitive industry in long run equilibrium in order to understand the long run supply behavior of such an industry.

   Remember that we show movement along a supply curve by asking what happens when demand changes. We will consider shifts in demand and ask how the industry responds in the long run.

   To a considerable extent we've already answered this question. We have found that, in general, demand shifts lead to a change in the number of firms but no change in long run market price.

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