As market price increases in the short run, a profit-maximizing firm in a perfectly competitive market will expand output along its:

Question

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A profit-maximizing firm in a perfectly competitive market will produce where marginal cost (MC) equals marginal revenue (MR), as this will maximize their profit. As market price increases, the firm will be able to sell their output at a higher price and so the MR curve will shift upwards. To maximize profit, the firm will expand output by producing more at the point where the new MR curve intersects with the MC curve. Therefore, the firm will expand output along its marginal cost curve.

As Market Price Increases in the Short Run, a Profit-Maximizing