The final equilibrium for the representative firm is shown in the adjoining diagram. [Keep in mind that these same effects are occurring for every other firm in the industry, both domestically and in the foreign country.] The demand curve shifts from D1 to D2 and the marginal revenue from MR1 to MR2 as a result of trade. The firm's cost curves remain the same. Entry or exit of firms causes the final demand curve to be tangent to the firms average cost curve, but, since the demand curve is more elastic (flatter) the tangency occurs down and to the right of the autarky intersection. In the end, firm output rises from Q1 to Q2 and the price charged in the market falls from P1 to P2. Although individual firm output rises for each firm, we cannot tell in this model setup whether industry output has risen. In the adjustment to the long-run zero-profit equilibrium entry, or more likely exit of firms would occur. If some firms exit then it remains uncertain whether fewer firms, each producing more output, would raise or lower industry output.

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