A profit-maximizing firm is producing an output of 300 units where price is £10 per unit and average total cost is £8 per unit. Given that the firm operates in a perfectly competitive market, which of the following is likely to be true?

The market supply curve will shift to the right.Correct
The firm will sell each unit of the product at a higher price.
The firm will stop production and exit the market.
The existing firms will exit the industry.

Explanation
Since the firm makes supernormal profits in a perfectly competitive market, new firms will enter the industry. This will shift the market supply curve to the right.