Give two reasons why the long-run industry supply curve may slope upward. Use an example to demonstrate your reasons.
At its current level of production, a profit-maximizing firm in a competitive market receives $12.50 for each unit it produces and faces an average total cost of $9. At the market price of $12.50 per unit, the firm's marginal-cost curve crosses the marginal-revenue curve at an output level of 1200 units. What is the firm's current profit? What is likely to occur in this market, and why?