Ouch! That's a tough one on pricing, except that you could have chosen a) by elimination, since answers b) to e) are clearly wrong.

23.    Regarding price-level policies:

    a)     charging a lower price than competitors may not mean that a firm is selling «below the market».
Yes, this is the correct answer, but it isn't an easy one. If you're not sure you understand, go back to Chapter 17 on pricing.

    b)    meeting competition is the only sensible policy in monopolistic competition.
Of course not, the «beauty» of monopolistic competition is that the firm is operating in some kind of a monopoly situation, implying that a higher price can be charged.

    c)    a firm in pure competition may increase profit by pricing «below the market».
No, whatever happens, if you're in a pure competition, pricing below the market will necessarily mean that profits will decrease, even if demand is highly elastic, since presumably the equilibrium price is where profits are maximal.

    d)    in an oligopoly situation, pricing «above the market» usually leads to an increase in profits.
Again no, for similar reasons as above, the market price, or equilibrium price, is where profits are maximized. So, whether you price above or below the market, profits will decrease.

    e)    all of the above are true.
Obviously not.