Question

Wheat is produced in a perfectly competitive market. Market demand for wheat increases. This will cause the individual wheat farmer's marginal revenue to ________ and their profit-maximizing level of output to ________.

Answer 1

The correct answer is increase, increase.

Step-by-step explanation:

In a perfectly competitive market, companies will have the power to modify the price of products according to their needs, for which each increase in demand will mean that the company will produce more wheat to satisfy the market and increase its profits. This is an effect that is directly produced by the behavior of the market, where the company will be able to modify the price without having negative consequences, since the increase in demand means the need to purchase wheat, which is a staple consumer product.