If prices rise in a perfectly competitive industry, then in the short run the firms in that industry will:
A)bid for more resources.
B)reduce marginal costs.
C)decrease production.
D)increase plant capacity.
E)none of the above.

Question

Quizplus · Accepted Answer

In a perfectly competitive industry, if prices rise, firms will bid for more resources to increase production and take advantage of the higher prices. This is because, in the short run, firms aim to maximize profits, and acquiring more resources can help them produce more goods to sell at the higher prices.

If Prices Rise in a Perfectly Competitive Industry, Then in the Short