Details of monopolistic competition

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4 Monopolistic Competition 

Note: We're going to get into more of the details of monopolistic competition. Look ahead in the book for the long-run cost curves. Just like perfect competition, a monopolistically competitive firm earns 0 economic profit in the long-run. Think about what that means for their average total cost curve and the price they charge consumers. Other than earning 0 economic profit, you can draw these graphs as if they were monopoly graphs. We'll learn that actually, the demand is a little more elastic for monopolistic competition than monopoly but don't worry about making it look perfect. 

Draw a monopolistically competitive firm's cost curves in long run equilibrium. Be sure to include MR, MC, d, and ATC. Show the profit-maximizing quantity and price charged.

Reference no: EM131756944

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