Final answer:
If a firm's marginal cost is higher than its marginal revenue, it should increase the price and decrease the output to maximize profits. The firm should aim to produce where marginal revenue equals marginal cost.
Step-by-step explanation:
If a price searcher is producing at a level of input such that its marginal cost was $6 and its marginal revenue was $4, the firm should increase the price and decrease the output. In the context of a firm striving for profit maximization, the aim is to produce up until the point where marginal cost equals marginal revenue. When the marginal cost exceeds the marginal revenue, the firm reduces its profits for every additional unit of output it produces.
For instance, if a market price increases to $6 and marginal costs are still at $6, the firm would find it profitable to increase its production because its marginal revenue has now increased to match the marginal cost, assuming marginal costs have not changed. However, in the scenario where marginal revenue is less than the marginal cost, the firm's profit would be greatest if it reduced output to where MR = MC. Therefore, if marginal costs are greater than marginal revenues, the firm should consider reducing its output.