1. Firms in monopolistic competition can acquire some market power by:
A. using price competition.
B. increasing their output to the perfectly competitive level.
C. differentiating the product.
D. engaging in tacit collusion.
2. The model of monopolistic competition characterizes a city's market for plumbing services. Suppose that the market is initially in long-run equilibrium, and then demand for plumbing services increases. In the short run, plumbing services' price will _____ and output will _____.
A. not change; not change
B. rise; rise
C. rise; fall
D. fall; fall