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A monopolistically competitive firm is producing at a short-run output level where average total cost is $10.00, marginal cost is $5.00, marginal revenue is $6.00, and price is $12.00. In the short run, the firm should:
A. Decrease the level of output.
B. Increase the level of output.
C. Make no change in the level of output.
D. Increase product price.

Respuesta :

thuyntd

Answer:

B. Increase the level of output.

Explanation:

Whether in the short-run or long-run, monopolistically competitive firms maximize profit by producing where marginal revenue equals marginal cost.

At this time marginal revenue ($6) is still higher than marginal cost ($5). Producing one more unit of out put would yield more profit ($6 - $5 = $1)

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