In the short run, a decrease in the market demand will cause a(n)______in the market equilibrium price and a perfectly competitive firm's demand and marginal revenue curve to shift____________ .

Question

Quizplus · Accepted Answer

If the market demand decreases, the equilibrium price will decrease as well. For a perfectly competitive firm, a decrease in market demand means there are fewer customers looking to buy the product, leading to a decrease in the demand curve and a leftward shift of the marginal revenue curve. This ultimately leads to a decrease in the equilibrium quantity of output and a decrease in the firm's profit.

In the Short Run, a Decrease in the Market Demand