If a firm under monopolistic competition is producing a quantity that generates MC

Question

If a firm under monopolistic competition is producing a quantity that generates MC < MR, then the marginal decision rule tells us that profit:
A) can be increased by increasing production.
B) can be increased by decreasing production.
C) can be increased by increasing the price.
D) is maximized only if MC = P.

Quizplus · Accepted Answer

When MC < MR, increasing production will increase profit until MC equals MR, according to the marginal decision rule.

If a Firm Under Monopolistic Competition Is Producing a Quantity