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Bingel [31]
3 years ago
13

If a monopolistically competitive firm's marginal cost increases, then in order to maximize profits, the firm will:

Business
1 answer:
Serjik [45]3 years ago
7 0

Answer:

A. reduce output and increase price.

Explanation:

In the case of monopolistic firm at the time of profit maximization, the marginal revenue should be equivalent to the marginal cost i.e.

Marginal revenue = Marginal cost

When the marginal cost rises, the cost of generating an additional unit is also rise to equate MR and MC and at the same time the output would be decreased and the price is increased also the price is more than its marginal cos

Therefore the option A is correct

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