If a Profit-Maximizing Firm, with an Increasing Average Cost Curve

Multiple Choice

If a profit-maximizing firm, with an increasing average cost curve, finds that it is producing a level of output at which marginal costs are $100, while marginal revenue is $5, what action should it take?

A) Raise output.
B) Lower prices.
C) Declare bankruptcy.
D) Decrease output.
E) None of the above.