The price increase shifts the y-curve upwards. Since the marginal revenue curve slopes negatively, the new intersection of both curves is necessarily to the left of the old one. This result is troublesome for the LMF since it gives rise to a negatively sloped supply curve implying the risk of unstable market equilibria. At any rate, even if market equilibria are stable the incentive system is ‘perverse’; a fall in output corresponds to a rise in price.