5. Magnificent Blooms is a florist in a monopolistically competitive industry. It is a successful operation, producing the quantity that minimizes its average total cost and making a profit. The owner also says, at its current level of output, its marginal cost is above marginal revenue. The graph illustrates this situation.

a. In the short run, could Magnificent Blooms increase its profits? How?

b. In the long run, could Magnificent Blooms increase its profits? How?

Price, cost, marginal revenue NC ATC ATC ATC MR. Quantity