True or False:
1. Monopolistic competition is a mixture of monopoly and perfect competition.
2. All firms in monopolistically competitive industries earn economic profits in the long run.
3. By differentiating their products and promoting brand-name loyalty, firms in monopolistic competition can raise prices without losing all their customers.
4. In monopolistic competition, as in perfect competition, all firms in an industry charge the same price.
5. Competitive firms and monopolistic competitive firms follow the same general rule when deciding how much to produce.
6. A monopolistic competitor’s demand curve is relatively inelastic (steep).
7. Unlike perfectly competitive firms, firms in monopolistic competition will operate with excess capacity, even in the long run.
8. Although certain inefficiencies are associated with monopolistic competition, society receives a benefit from monopolistic competition in the form of differentiated goods and services.
9. Even though advertising will add to the cost of production, it may lead to significant economies of scale that may lower the per-unit total cost.
10. Misleading claims and preposterous bragging about products are a type of advertising that will result in increased demand for a firm’s products.