At a Price of $8, the Marginal Revenue of a Monopolistically

question 288

Multiple Choice

At a price of $8, the marginal revenue of a monopolistically competitive firm is $5. If the marginal cost is $7 and average total cost is $4, what should the firm do to maximize profits?

• A) reduce output and increase price
• B) increase output and decrease price
• C) reduce both output and price
• D) increase both output and price

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Significant Loss

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