Monopolistic Competition with a Homogeneous Product
In monopolistic competition, firms produce differentiated products. Moreover, in this Demonstration based on a numerical example found in , each one of the monopolistically competitive firms produces a homogeneous product with free entry and exit. The demand function is given by and the cost function is (where is fixed costs).[more]
The Demonstration shows the profits, the dead weight losses (DWL), and the average cost pricing for each representative monopolistically competitive firm, given a number of firms in the market and the fixed costs. As you can see, when the fixed costs increase, the long-run zero-profit equilibrium is sustainable with fewer firms.[less]
 D. Carlton and J. Perloff, Modern Industrial Organization, 4th ed., Boston: Pearson/Addison–Wesley, 2005.
 Wikipedia. "Monopolistic Competition." (Jan 13, 2014) en.wikipedia.org/wiki/Monopolistic_competition.