The statements below are about monopolistic competition

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The statements below are about monopolistic competition. Indicate whether each statement is true or false and why.

1. A monopolistically competitive firm may be able to distinguish its product from other firms by adjusting its style, level of quality, or location offerings.

2. Product differentiation enables a monopolistically competitive firm to have some control over the price of its product.

3. In the long run each monopolistically competitive firm produces a level of output that results in allocative efficiency.

4. In the long run each monopolistically competitive firm produces a level of output that results in productive efficiency.

5. To maintain a competitive edge and earn economic profits, a monopolistically competitive firm has an incentive to improve its product.

6. Compared with perfectly competitive markets, under monopolistic competition consumers with diverse tastes benefit from the opportunity to choose from a greater range of products and services.

7. In order to maximize its profits, each monopolistically competitive firm must determine the price of its product, how to differentiate its product, and how much it will spend on advertising.