Amonopolistically competitive firm is producing at a short-run output level where average total cost is $10.00, marginal cost is $5.00, marginal revenue is $6.00, and price is $12.00. in the short run, the firm should:
1. decrease the level of output.
2. increase the level of output.
3. make no change in the level of output.
4. increase product price.

2. Increase the level of output

Explanation:

A monopolistically competitive firm has Producer's Equilibrium where :                Profit (i.e difference between Total Revenue & Total Expenditure) is maximum .                                                                                                                         This distance is max where: TR & MR are parallel (have equal slopes) ,slope being MR & MC (change in TR , TC with change in quantity) .  

So, Producer Equilibrium : TR - TC is maximum , MR = MC                                                  When MR > MC :  Additional Revenue from additional production is greater than Additional Cost from it , so it is Profitable to Increase production When MC > MR : Additional Revenue from additional production is less than Additional Cost from it , so it is better to Decrease production

lbc corporation makes and sells a product called product wz. each unit of product wz requires 4.1 hours of direct labor at the rate of $20.00 per direct labor-hour. management would like you to prepare a direct labor budget for june. the company plans to sell 28,000 units of product wz in june. the finished goods inventories o

1. c

2. b

3. a

4. c

5. a

6. b

7. c

8. c

9.b

10. d

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