You are running a business in a perfectly competitive market. Your product sells for $5 and your marginal costs rise as output rises. (a) If the cost of producing another unit of output is $4, what should you do? What will happen to your profit? (b) If the cost incurred from your last unit of output produced is $6, what has happened to your profit? What should you do about this? (c) What general rule do the above examples suggest about how a firm should determine the level of output to produce so as to maximize profit?

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