The diagram below shows a profit-maximising (loss-minimising) firm operating in a perfectly competitive market, producing Q1 Q_1\,Q1 units of output at a market price of P1P_1P1.
Which of the following is most likely to occur in the long run?
New firms will enter the market, causing a downward shift in the individual firm's average and marginal revenue curves.
Existing firms will exit the market, causing a downward shift in the individual firm's average and marginal cost curves.
Existing firms will exit the market, causing an upward shift in the individual firm's average and marginal revenue curves.
New firms will enter the market, causing an upward shift in the individual firm's average and marginal cost curves.
