The deep state entered Americaâs national discourse in 2017 with the feeling of an already familiar character, ready to assume a starring role as hero or villainâdepending on how you feel about Trump.
If a firm produces past that point, then marginal revenue is less than marginal cost. This means that the firm is losing profit with each additional unit of output and it should produce less. Remember that a competitive firm has a flat MR curve which is equal to the market price.
Now letâs consider what determines a firmâs shutdown decision. If the firm shuts down, it loses all revenue from the sale of its product. At the same time, it Figure 2 Marginal Cost as the Competitive Firmâs Supply Curve An increase in the price from P 1 to P 2 leads to an increase in the firmâs profit-maximizing quantity from Q 1 to Q 2.