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?
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.