A Firm in Monopolistic Competition with a Down-Sloping Demand Curve

question 53

Multiple Choice

A firm in monopolistic competition with a down-sloping demand curve:

• A) does not have to worry about price competition due to the nature of its demand curve.
• B) can use marginal analysis to help it maximize profits.
• C) will have to charge the "market price" which is set by the intersection of industry supply and demand.
• D) could use marginal analysis to compare alternatives-but this would not help in pricing because this method focuses on selling one more unit and therefore ignores total profitability.
• E) None of these alternatives is correct.

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