Problem 1: Due to the existence of a large number of similar, but not identical, substitutes in most communities, the market for chiropractors is best considered
a. an oligopoly
b. perfect competition
c. monopolistic competition
d. a monopoly
Problem 2: The demand curve for a firm under monopolistic competition is
a. U-shaped
b. upward sloping
c. downward sloping
d. vertical
Problem 3: A firm in monopolistic competition maximizes its profit by producing at the level at which
a. MC = ATC
b. MC = AR
c. MC = MR
d. MC = P
Problem 4: If a firm under monopolistic competition is producing a quantity that generates MC > MR, then the marginal decision rule tells us that profit
a. can be increased by increasing production
b. can be increased by decreasing production
c. can be increased by decreasing the price
d. is maximized only if MC = P
Problem 5: Product differentiation under monopolistic competition means that each firm
a. charges slightly different prices
b. has a pure monopoly
c. maximizes profit where MC = P
d. faces a horizontal demand curve