1) A monopolistic competitor wishing to maximize profit will select profit will select a quantity where:

a) marginal cost equals average cost

b) marginal revenue equals marginal cost

c) marginal revenue equals average cost

d) marginal cost equals demand

2) If a firm is producing a quantity where marginal revenue exceeds marginal cost, the firm should ____existing levels of production, in order to____.

a) expand ; decrease total costs

b) decrease; increase profitability

c) decrease ; increase total revenue

e) expand ; increase profitability

3) If a firm is producing a quantity where marginal cost exceeds marginal revenue, the firm should____exisiting levels of production, in order to_____.

a) expand ; decrease total costs

b) decrease ; increase profitability

c) expand ; increase profitability

e) decrease ; increase total revenue