Answer to Question #285247 in Economics of Enterprise for Pritee

Question

Diagrammatically the impact on firms profit if in the short run demand for the product reduces

Answer 1

Characteristics of the demand curve for of the seller's products in a perfect competition market

competition determine the parameters of the graphs gross, average and marginal revenue.

The shaded area (yellow) shows that revenues are less than total costs, so the company is making a loss.