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# At its current output level, a firm’s marginal revenue exceeds its marginal cost and its price...

At its current output level, a firm’s marginal revenue exceeds its marginal cost and its price is less than its average cost. Therefore, it should:

 A. Increase output until MR = 0 B. Increase its price C. Decrease output until MR = MC D. Shutdown Immediately E. Increase output until MR = MC

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Answer #1

Option E (Increase output until MR=MC) is correct.

It is because profit is maximized when MR and MC are equal. Therefore, firm should increase output until this condition.

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