Samurai Sam's, a producer of frozen sushi, is a monopolistically competitive firm. The firm is currently selling frozen California rolls at a $4 price. Samurai Sam's marginal cost is $1.75 and its marginal revenue is $1.50. The firm should ________ to maximize profits in the short run.
A. continue to produce the same output level
B. decrease output to where price just equals marginal cost
C. increase output to where price just equals marginal cost
D. Indeterminate from the given information.
Answer: B
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What will be an ideal response?