Mama Lena's, a frozen food producer, is a monopolistically competitive firm. Mama Lena's is currently selling frozen lasagna at a price of $10. Mama Lena's marginal cost is $5 and marginal revenue is $5. This firm should ________ to maximize profits in the short run.
A. decrease output to where price just equals marginal cost
B. increase output to where price just equals marginal cost
C. continue to produce the same output level
D. Indeterminate from the given information.
Answer: C
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