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

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continues to produce the same level of output.

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decreases output so that marginal cost equals the output price.

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shuts down.

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decreases output so that marginal revenue exceeds marginal cost.

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increases output so that marginal cost exceeds marginal revenue.

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Mrs. Smith's bakery shop is a firm in monopolistic competition. She is currently...

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