1. In the model of monopolistic competition, we say that there is product differentiation. What does this mean, and how does it differ from the assumption of homogeneous goods in perfect competition? 2. Suppose a city experiences substantial population growth. What is likely to happen to profits in the short run and in the long run in the market for haircuts, a monopolistically competitive market? 3. Suppose that two industries each have a four-firm concentration ratio of 75%. a. Explain what this means. b. Suppose that the Herfindahl-Hirschman index (HHI) of the first industry is 425, and that the HHI of the second is 260. Which would you say is the more competitive? Why?