Figure 9.5 Responses to a Rotation in the Demand Curve
(a) For a perfectly competitive market, a rotation in the demand curve from D1 to D2 does not change the equilibrium quantity Q*c and price Q*c.
(b) For a firm with market power, a rotation in the demand curve from D1 to D2 rotates the marginal revenue curve from MR1 to MR2. Prior to the rotation, the profit-maximizing quantity and price (Q*m1, P*m1) occurred where MR1 = MC. After the rotation, the firm is profit-maximizing at a higher quantity and lower price (Q*m2, P*m2) where MR2 = MC.