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. What is most likely to occur in the long run?
New firms will enter the market, causing a downward shift in the firm's average and marginal revenue curves.
Existing firms will exit the market, causing a downward shift in the firm's average and marginal cost curves.
Existing firms will exit the market, causing an upward shift in the firm's average and marginal revenue curves.
Existing firms will exit the market, causing an upward shift in the firm's average and marginal cost curves.
