A profit-maximizing firm will base its supply decisions on its marginal:

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A profit-maximizing firm will aim to produce output as long as its marginal revenue equals its marginal cost. Since private cost refers to the cost of producing an additional unit of output, it is the most relevant factor that influences the firm's supply decisions. Social cost and external cost can also affect the overall welfare of society, but they are not directly considered by a profit-maximizing firm. Transactions cost, on the other hand, refer to the cost of conducting a transaction, and are not directly related to the firm's production decisions.

A Profit-Maximizing Firm Will Base Its Supply Decisions on Its