Final answer:
A monopolistically competitive firm will decrease its output if the marginal revenue it earns is less than its marginal cost.
Step-by-step explanation:
In a monopolistically competitive market, a seller's profit is maximized when marginal revenue (MR) equals marginal cost (MC). If the marginal cost of a firm is $3.56, the firm will decrease its output if the marginal revenue it earns from selling additional units of its product is less than $3.56. By reducing output, the firm can reduce its costs and maintain profitability.