Final answer:
The Decline stage is where a firm decides to keep or phase out a product, based on whether they can remain profitable by equating price with marginal revenue and cost, or if they should minimize losses by shutting down.
Step-by-step explanation:
The stage of the product life cycle where the goal is to remain profitable and decide whether to keep or phase out the product is the Decline stage. In this stage, a firm may notice decreasing sales and profits, indicating that the product is losing its appeal or becoming less relevant in the market. This could be due to market saturation, technological advances, changes in consumer preferences, or competitive pressures. At this point, the firm needs to make critical decisions based on economic considerations. Specifically, the firm must determine if it can produce the output level where price equals marginal revenue and equals marginal cost, or whether it should shut down and only incur its fixed costs. This is in line with the principles of microeconomics where firms make production decisions based on their cost structures and the revenue they expect to earn.