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