How does an increase in marginal cost affect the market equilibrium price and quantity in a competitive market?

When marginal cost increases in a competitive market, it means that it costs producers more to make each additional unit of a product. As a result, many producers may decide to produce less because they cannot cover their higher costs, which leads to a decrease in the overall supply of the product. When supply decreases while demand remains the same, there are fewer goods available for consumers, which usually causes the market equilibrium price to rise. For example, if a bakery faces higher costs for flour and decides to bake fewer loaves of bread, the price of bread may increase because there are fewer loaves for sale. This change in price and quantity helps balance the market again, as higher prices may encourage other bakers to enter the market or existing bakers to increase production when costs stabilize.