- Home
- George Bowling
- Survey Economics 100-80
- ECON 100 Monopolistic Competition Model Question

**St. Charles Community CollegeECON 100 Survey EconomicsMonopolistic Competition Example**

Assume a firm that a firm that produces a single product is operating as a monopolistic competitor. We are given the following demand schedule for the firm’s product:

Price |
Quantity |

($) |
(Units) |

16 |
0 |

15 |
300 |

14 |
600 |

13 |
900 |

12 |
1200 |

11 |
1500 |

10 |
1800 |

9 |
2100 |

8 |
2400 |

7 |
2700 |

6 |
3000 |

**Part a:**

Using the data shown above, and utilizing the axes shown below, construct a demand curve for the firm’s product.

**Part b:**

Assume that the firm has a variable and fixed cost schedule that contains the following values:

Quantity |
Fixed Costs |
Variable Costs |

(Units / Mo. |
($) |
($) |

0 |
4100 |
0 |

300 |
4100 |
2300 |

600 |
4100 |
3000 |

900 |
4100 |
3900 |

1200 |
4100 |
5000 |

1500 |
4100 |
6300 |

1800 |
4100 |
7800 |

2100 |
4100 |
9500 |

2400 |
4100 |
11400 |

2700 |
4100 |
13500 |

3000 |
4100 |
15800 |

Complete the following table using the data given above and the formulas given below:

Quantity (Units Per Month) |
Fixed Costs ($) |
Variable Costs ($) |
Total Costs ($) |
Marginal Costs ($) |
Average Total Costs ($) |
Price ($) |
Total Revenue ($) |
Marginal Revenue ($) |
Profit ($) |

0 |
4100 |
0 |
16 |
||||||

300 |
4100 |
2300 |
15 |
||||||

600 |
4100 |
3000 |
14 |
||||||

900 |
4100 |
3900 |
13 |
||||||

1200 |
4100 |
5000 |
12 |
||||||

1500 |
4100 |
6300 |
11 |
||||||

1800 |
4100 |
7800 |
10 |
||||||

2100 |
4100 |
9500 |
9 |
||||||

2400 |
4100 |
11400 |
8 |
||||||

2700 |
4100 |
13500 |
7 |
||||||

3000 |
4100 |
15800 |
6 |

The following formulas are given as a guide in your calculations:

- Total cost = (fixed cost) + (variable cost)
- Marginal cost = (change in total cost) / (change in output or quantity)
- Average total cost = (Total cost) / (Output or quantity)
- Total revenue = (Price) X (Quantity)
- Marginal Revenue = (Change in total Revenue) / (Change in output)
- Profit = (Total Revenue) – (Total Cost)

**Part c:**

Using the calculated data from part “b”, and the following set of axes, plot the total revenue curve and the total cost curve. Then locate the region of the graphs which represent the maximum profit level of the firm.

**Part d:**

Using the data that you calculated in the part b above, and utilizing the axes that are given below, plot the demand curve, the marginal revenue curve, the marginal cost curve, and the average total cost curve.

**Part e:**

Using the data that you calculated in part b, and using the axes shown below, plot the firm’s profit curve.