Suppose that the firm's initial demand curve had been P = $5,000 - 50Q and that it shifted inward to P = $4,000 - 50Q. Assume MC = $500. How would this shift in demand affect the firm's profits?
Discuss the direction of change in price, quantity, and average total cost that you expect. Then check your answer by calculating price, quantity, and profit. You can refer back to graphical problems you solved in this news analysis to observe the change in average total cost.