Assume that the firm starts at Zero Economic Profit (MR=D=AR=P) is at the minimum of ATC.
Can Cause + Economic Profit | Can Cause - Economic Profit | Can Cause the Firm to Shut-Down in the Short-Run | |
|---|---|---|---|
Increasing Market Supply | |||
Decreasing Market Supply | |||
Increasing Market Demand | |||
Decreasing Market Demand |
When Supply and/or Demand shift in the market, this causes a change in to the firm, because the firm is a taker. If the drops entirely below , the firm will make an economic . If the price drops even further, below the firm might be forced to .