A firm in monopolistic competition with a down-sloping demand curve
A. can use marginal analysis to help it maximize profits.
B. could use average-cost pricing to consider a range of profitable prices.
C. does not have to worry about price competition, due to the nature of its demand curve.
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. will have to charge the market price, which is set by the intersection of industry supply and demand.
Answer: A
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