If a perfectly competitive firm is producing 500 units of output and the marginal revenue from producing the 500th unit of output is $4 and the marginal cost is $3.50, which of the following is true?
A) The firm is taking a loss from producing the 500th unit.
B) The firm should increase production.
C) The firm should decrease production.
D) The firm is producing the profit-maximizing output.
B) The firm should increase production.
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What will be an ideal response?