Assume Price Exceeds Average Variable Cost Over the Relevant Range

question 192

Multiple Choice

Assume price exceeds average variable cost over the relevant range of demand.If a monopolistically competitive firm is producing at an output where marginal revenue is $23 and marginal cost is $19, then to maximise profits the firm should

• A)continue to produce the same quantity.
• B)increase output.
• C)decrease output.
• D)shut down.

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