A monopolistically competitive firm in the short run is producing where price is $3.00 and marginal cost is $1.50.To maximize profits:
A) the firm should continue to produce this quantity.
B) the firm should increase output and decrease price.
C) the firm should decrease output and increase price.
D) the firm should produce the level of output where marginal revenue is $1.50.

Question

Quizplus · Accepted Answer

The firm should produce the level of output where marginal revenue is equal to marginal cost to maximize profits.

A Monopolistically Competitive Firm in the Short Run Is Producing