Perfect Competition and a Demand Shift
If a firm in a perfectly competitive market anticipates an industry-wide, price-inelastic increase in demand for its product, which strategy will maximize its profit in the short run?
A
Expand into new markets to diversify consumer base and spread risk.
B
Increase the price to capitalize on the higher willingness to pay.
C
Keep prices stable and focus on marketing to raise brand awareness.
D
Decrease the price to sell more units and gain market share.
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