Assume Cathy's Cupcake Company operates in a perfectly competitive market producing 10,000 cupcakes per day. At this output level, marginal cost exceeds this firm?s price. Assuming price exceeds average variable cost, to maximize profits Cathy's should
A. increase their output.
B. stop producing since it is earning a loss.
C. decrease their output.
D. make no adjustments as they are already maximizing their profits.
Answer: C
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