Suppose a firm finds itself producing at a point where price has risen and now marginal revenue is greater than marginal cost. what should it do to maximize profits?
This means they are now spending more to make the product than they are receiving for selling the product. Thus, they would have two choices: either find cheaper materials to lower their cost of production or increase their price that they sell the product at. (i.e. raising the price from $5 to $10)
