MrsSmith's Bakery Shop Is a Firm in Monopolistic Competition

Mrs.Smith's bakery shop is a firm in monopolistic competition.She is currently selling a box of bread for $16.The firm's marginal cost is $7 and marginal revenue is $7.To maximize economic profit Mrs.Smith

A) shuts down.
B) decreases output so that marginal revenue exceeds marginal cost.
C) continues to produce the same level of output.
D) increases output so that marginal cost exceeds marginal revenue.
E) decreases output so that marginal cost equals the output price.

Correct Answer:

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