The following figure shows equilibrium at the industry and firm level.Figure 10.6
In the figure,
S 1 , S 2 , S 3 are the market supply curves.D 1 and D 2 are the market demand curves.MC is the marginal cost curve of the firm.MR 1 and MR 2 are the marginal revenue curves of the firm.ATC is the average-total-cost curve of the firm.
-If market demand increases, a perfectly competitive firm will find:

Question

The following figure shows equilibrium at the industry and firm level.Figure 10.6
  In the figure,
S 1 , S 2 , S 3 are the market supply curves.D 1 and D 2 are the market demand curves.MC is the marginal cost curve of the firm.MR 1 and MR 2 are the marginal revenue curves of the firm.ATC is the average-total-cost curve of the firm.
-If market demand increases, a perfectly competitive firm will find:

Quizplus · Accepted Answer

If market demand increases, the equilibrium price and quantity will increase. As a result, the firm's marginal revenue will increase, and it will adjust its output level to maximize profits. This will lead to an increase in the firm's profit-maximizing output level. The cost curves, average revenue curve, and marginal cost curve of the firm will remain the same. Therefore, the correct answer is B.

The Following Figure Shows Equilibrium at the Industry and Firm