Principles of Microeconomics / Unit 9 MIC 0807 short lesson, about 20 seconds
Entry Shifts the Firm's Demand Left
Captions available
The idea
Profit attracts new varieties. Each entrant takes some customers, so the existing firm's demand curve shifts left and grows more elastic, and its marginal revenue shifts with it.
In practice
A fourth pizza shop opens and the others each sell fewer at every price.
Where people slip
Entry shifts the firm's own demand, not the market's. That is the mechanism monopoly lacks.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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