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What changed for this firm between the short run and the long run? In the short run, the firm faces a negatively sloped demand curve and maximizes its profits by choosing its level of output such that marginal costs equal marginal revenue . The firm has no excess capacity . In the long run, new firms enter, and this firm's demand curve shifts to the left until profits are eliminated . The firm maximizes its profits by choosing its level of output such that marginal costs equal marginal revenue, which occurs where marginal cost is minimized and where the long-run average cost is tangent to demand. The firm has excess capacity .