Suppose that initially the price is $50 in a perfectly competitive market. Firms are making zero economic profits. Then the market demand shrinks permanently, some firms leave the industry, and the industry returns to a long-run equilibrium. What will be the new equilibrium price, assuming cost conditions in the industry remain constant? a. $50.
b. $45.
c. Lower than $50 but exact value cannot be known without more information.
d. Larger than $45 but exact value cannot be known without more information.
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