a-monopolistically-competitive-firm-notices-that-its-marginal-cost-has-increased

Question

A monopolistically competitive firm notices that its marginal cost has increased. To continue maximizing profit, what should the firm do?

Accepted Answer

Decrease production until marginal revenue equals the new marginal cost.

Answer

Decrease price to match the new marginal cost.

Answer

Maintain current production levels.

Answer

Increase production to increase marginal revenue.