Please explain step by step the paragraph and the diagram, thanks!

The situation depicted in EigumlLl is still inherently unstable. The reason this time is that the old rm is not employing the optimal quantity of xed inputs. At an output of 190 the rm would want to employ less capital stock than it did when producing 200. As the rm readjusts its capital stock downwards we get new short-run cost curves ATC2 and SMCZ in Figure 12,14. Note that as the SMC curve shifts to the left so does the industry supply curve. In terms of its effect on the industry supply curve, this adjustment thus works in the opposite direction from the adjustment caused by the entry of new rms. But the net effect of the two adjustments must be to shift industry supply to the right. If it were not, price would not have fallen in the rst place, and there would have been no reason for existing rms to reduce their capital stocks. The net effect, in this case, leaves us with industry supply curve S\" and an equilibrium price of8.60. Market Individual Firm P E/Q 5" S' SMC1 SMC2 ATC1 ATC2 10 10 8.60 8.60 8.50 -- II'; = 378 6.50 LMC LAC D Q 180 200 Q; FIGURE 12.14 Second Step along the Path toward Long-Run Equilibrium Entry of new firms causes supply to shift rightward, lowering price from 10 to 8.60. The lower price causes existing firms to adjust their capital stocks downward, giving rise to the new short-run cost curves ATC2 and SMC2