In the event that the economy is in long-term equilibrium, a negative change in short-term aggregate supply would cause the economy to shift from U to V.
In the long run, a firm achieves equilibrium when it adjusts its plant/s to produce output at the minimum point of its long-run Average Cost (AC) curve. This curve is tangential to the market price-defined demand curve. In the long run, a firm just earns normal profits.
The long-run market price equals the minimum average total cost (ATC) of producing the product. And since suppliers will produce until
marginal cost = market price,
the long-run equilibrium in a purely competitive market can be summarized thus:
Average Total Cost = Marginal Cost = Market Price.
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