If a firm experiences a technological advancement that reduces its marginal cost, it can increase its output while keeping its price unchanged because it operates in a perfectly competitive market.

When a firm experiences a technological advancement that lowers its marginal cost, it means that the cost of producing each additional unit of its product has decreased. In a perfectly competitive market, many firms sell identical products, so the price is determined by the overall market supply and demand. If this firm can produce more at a lower cost, it can increase its output without raising the price of its product, since the market price remains the same. For example, if a bakery finds a new oven that bakes bread faster and cheaper, it can make more loaves without charging more, allowing it to meet customer demand more effectively. This increase in production can help the firm earn more profits while still selling at the market price.