$20 Bonus + 25% OFF
Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!

Monopolistically Competitive Markets

tag 0 Download8 Pages / 1,791 Words tag Add in library Click this icon and make it bookmark in your library to refer it later. GOT IT


Write a Report on Pricing Stategy of your Choosen Company.



Economic analysis is quite important in pertaining the prising strategies that are to be associated by a firm. It helps the firms to arrive at the proper execution of strategies, thereby maintaining their business in the market. The pricing  strategies associated to a firm depend upon its competitive market. The magnitude of competitiveness in the market helps in analysing the policies and the plans to be executed, under which the particular referred firm would survive in the market (Nikaido 2015). In order to analyse the market, it is quite necessary to understand the type of market in which the firm prevails. There are two forms of market, namely, perfect competitive market and imperfectly competitive. Each market has its own attributes depending upon which the optimum price in the market is charged. In order to analyse the pricing strategy of such market, in this report the case of monopolistically competitive market have been taken into consideration. Monopolistically competitive markets are a type of imperfectly competitive market, where each firm has close substitutes to each other (Haaland and Venables 2016). To analyse the market in an extensive way, McDonalds have been chosen s the appropriate firm to be taken into consideration.

The framework of the report has been divided into subparts, where the next section deals with the background of the company. It provides the details of McDonalds regarding its products and the competitors in the market. Following that section is the economic analysis, where the attributes of the company has been explained related to the monopolistically competitive market. The demand curve analysis is stated for that particular firm followed by the pricing strategies faced by the firm. This would help in deriving the optimum price in which the company must sell its products.


Background of the Company

Company Background - McDonalds is one of the oldest fast food chain originated in America since the year 1940. The organization has done business internationally with its wide varieties of food products. McDonalds has extensive fast food products to be offered to the consumers, where it faces a favourable demand among them. The firm has been quite flexible with the change in the habits of the consumers. In response to the changing tastes of the consumers, it has adopted new products along with its old ones. This has provided the consumers to select from a wide range of product to be offered by the company.

Business Objectives – the business objective of mcdonalds is to be the favourite place for the consumers in the fast food industry. In order to achieve this aim they have created a global strategy plan. This global strategy plan is called the “the plan to win”. This plan focuses on creating customer experience. Mcdonald’s has a total market share of 21.7% worldwide, in the fast food industry. The annual sales for the year 2016 were 24.62 billion for the organization globally.

Competing Companies - Being in the fast food chain business internationally, McDonalds faces tough competition from numerous other organizations such as, burger king, KFC, pizza hut and wendy’s.  These firms are equally popular among the consumers worldwide as mcdonalds.

Competing Products- being in the fast food industry, all the products of the firm are quite  competitive in nature. all the competitors of the firm sell products that are closed substitutes of each other.


Company Strategies - in order to attain the objective of the firm, mcdonalds implements various pricing strategies that would help them in obtaining a sustained price for its products. This price would help the firm in giving a tough competition to its competitors and maintaining the demand for the products among the consumers. McDonalds aims at spreading its business worldwide and gaining the market power in the competitive environment. The organization would be successful in attaining its aim by following the pricing strategy schemes associated to the market in which its prevails ( 2017).

Economic Analysis

Demand Curve

Among the various competitive products that are produced in the firm, one of the most popular items among the consumers of mcdonalds is their happy meal boxes. Happy meals are considered as one of the most economical products of the organization that would enable the consumer in choosing many products rather than one. McDonalds uses the strategy of product binding in order to increase their sales of various products as one.

Real product data – the happy meal product of mcdonalds consists of choice of certain products in a box. It focuses the small children who come to their stores. The choice of the product ranges from country to country. This product has been introduced in the year 1979.

Mix of competing and own product volume – happy meals of mcdonalds is considered as one of the most vital products of the company that accounts for almost 10% of their revenue. On looking at the popularity of the product, other competitors like burger king has also launched their own happy meal bags. Yet, the popularity of the product has not been able to reach the peak as mcdonalds. In order to attract the customers, the competitors have been successful in maintaining a low price approach.

Public data- the demand for happy meals has reduced to a certain extent due to the availability of cheaper competitive products in the market that is equivalent to the level of the referred product.

Conversations with experts- on conducting the research work, it is quite vital to attain knowledge from the managerial heads of the firm. the managerial heads has stated their costs of production, fixed and variable costs associated with the product, along with the current prices charged on the product. this has provided with ample information regarding the pricing structure of the firm.


The demand curve faced by the monopolistically competitive market is downward sloping. Hence, it could be stated that the demand curve of McDonalds is downward sloping in nature. The demand curve of the firm supports the law of demand. According to the law of demand, as the price of the product increases, the quantity demanded of the product decrease, whereas, as the price of the product falls, its quantity demanded increase, other factors affecting demand remaining constant. The slope of the demand curve faced by McDonalds has several implications (Parenti, Ushchev and Thisse 2017).

McDonalds, being a monopolistically competitive firm, aims at maximising its profit when they produce at a level where the marginal costs equals the marginal costs of the firm. With a negatively sloped demand curve, there are chances for the prices to change thereby exceeding the marginal costs (Blanchard and Kiyotaki 2017). This reduces the consumer surplus of the products in the short run. The downward sloping demand curve faced by the firm can be shown in figure 1 below.

Pricing Strategies   






Fixed Cost


Variable Cost


































For a company like McDonalds it is quite essential to set a price of their product that would generate them long run stability. Hence, the price must be set at such a place where they could incur normal profit in the long run. The organization should be efficient enough to compete with the rivals in the market. This would provide them with the incentive of capturing the market and generating sales of their products throughout. Higher prices would make them less competent in nature as there are many more fast food restaurants present around the globe (d'Aspremont, Gabszewicz and Thisse 2013). The pricing strategy to be followed by the firm should be quite efficient in grabbing the attention of the consumers and maintain the loyalty of the consumers towards themselves. Depending upon the table provided above it could be stated that the maximum profit that could be attained would be at the price level $4 per meal pack. Yet, the demand at such a price is quite low for the company. Hence, in order to attain the level at which both the company’s profit and the demand for the products could be optimum would be field at $3.5.



Monopolistically competitive firms are the one who produce goods that are close substitutes of each yet, with some form of product differentiation in them. This provides them with the incentive to charge the price for their product depending upon their market power. Depending upon the demand criteria for the happy meals of mcdonalds and the pricing strategies depending upon such demand values, it could be stated that the maximum sales of the organization would be attained at a point where the price of the product would be the minimum, i.e., $2.5. Yet, this point would not be efficient enough to generate the maximum revenue for the company. The price where mcdonalds would attain the maximum revenue would be fixed at $4. It could be stated that the price point for the firm to attain the minimum cost would be when they would be generating the least products in the market due to decreased demand rate. In order to attain the optimum prevailing price for the products, it could be stated that the organization must choose $3.5 as the appropriate one. At this price the revenue earned by the firm would be $420 billion, where as their cost would be $320. It would help the organization in achieving a profit of $100 billion, which would be lesser than the profit could have been achieved with greater prices fixed yet, they would attract the demand for the products.



Bertoletti, P. and Etro, F., 2016. Monopolistic competition when income matters. The Economic Journal.

Blanchard, O.J. and Kiyotaki, N., 2017. Monopolistic competition and the effects of aggregate demand. The American Economic Review, pp.647-666.

d'Aspremont, C., Gabszewicz, J.J. and Thisse, J.F., 2013. On Hotelling's" Stability in competition". Econometrica: Journal of the Econometric Society, pp.1145-1150.

Dixit, A.K. and Stiglitz, J.E., 2017. Monopolistic competition and optimum product diversity. The American Economic Review, 67(3), pp.297-308.

Haaland, J.I. and Venables, A.J., 2016. Optimal trade policy with monopolistic competition and heterogeneous firms. Journal of International Economics, 102, pp.85-95. (2017). About Us: McDonald's Facts and Story | McDonald's. [online] Available at: [Accessed 11 Mar. 2017].

Nikaido, H., 2015. Monopolistic Competition and Effective Demand.(PSME-6). Princeton University Press.

Nocco, A., Ottaviano, G.I. and Salto, M., 2014. Monopolistic competition and optimum product selection. The American Economic Review, 104(5), pp.304-309.

Parenti, M., Ushchev, P. and Thisse, J.F., 2017. Toward a theory of monopolistic competition. Journal of Economic Theory, 167, pp.86-115.

Spence, M., 2016. Product selection, fixed costs, and monopolistic competition. The Review of economic studies, 43(2), pp.217-235.

Download Sample

Get 100% money back after download, simply upload your unique content* of similar no. of pages or more. We verify your content and once successfully verified 100% value credited to your wallet within 7 days.

Upload Unique Document

Document Under Evaluation

Get Credits into Your Wallet

*The content must not be available online or in our existing Database to qualify as unique.

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help. (2018). Monopolistically Competitive Markets . Retrieved from

"Monopolistically Competitive Markets ." My Assignment Help, 2018,

My Assignment Help (2018) Monopolistically Competitive Markets [Online]. Available from:
[Accessed 02 July 2020].

My Assignment Help. 'Monopolistically Competitive Markets ' (My Assignment Help, 2018) <> accessed 02 July 2020.

My Assignment Help. Monopolistically Competitive Markets [Internet]. My Assignment Help. 2018 [cited 02 July 2020]. Available from: is the perfect solution to render quality solution for all sort of academic issues. We have hired professionals from different fields of study to provide assistance with different subjects. We successfully have provided different types of assignment solutions on 100+ subjects. We have hired industry experts to deliver nursing assignment, hr assignment and finance assignment help. To offer quality content with IT assignments, we have hired IT professionals to render programming language assignment help and IT assignment help for other types of IT assignments as well.

Latest Economics Samples

ECF3120 Consumer Economics

Download : 0 | Pages : 7
  • Course Code: ECF3120
  • University: Monash University
  • Country: Australia

Answer: Background of the study The topic for the proposal is the apparel consumption in Australia. The rise in online apparel retailing is taking away the profits of the local retail apparel shops in Australia. The apparel retail comprise of the sale of women’s, men’s and infant’s wear. The revenue growth from the online retail business is about 15.1 percent which is a threat for the local retailers as customers are shiftin...

Read More arrow Tags: Australia 6 Consumer Economics Monash University 

HI5003 Economics For Business 34

Download : 0 | Pages : 3

Answer: 1. (A) Name of point B is inefficient. Name of point A is efficient. Name of point D is unattainable. 10 units of machinery is the opportunity cost of producing 10, 000 more tons of rice when the economy of Nepal is operating at point T. (B) (B1) Discovery of fertilizer would increase the output of rise given the amount of other things will take the economy of Nepal to PPF2. (B2) Discovery of steel would increase the production of ...

Read More arrow Tags: Australia 6 economics for business Holmes Institute 

POLI1095 Evidence Policy And Practice

Download : 0 | Pages : 6
  • Course Code: POLI1095
  • University: Royal Melbourne Institute Of Technology
  • Country: Australia

Answer: Impact of COVID-19 on the Australian economy Australia is renowned as the fourteenth largest economy in the world that has the total Gross Domestic Product of about 1.69 trillion Australian dollars in 2019. It follows a mixed market economy which is one of the most developed in the world. The economy has already faced an economic loss due to the bush fire that took place in the beginning of 2020 and had been struggled to balance its e...

Read More arrow Tags: Australia 6 Evidence  Policy and Practice Royal Melbourne Institute of Technology 

MAE203 The Global Economy

Download : 0 | Pages : 6

Answer: 1a.   Figure 1: Trend in monthly cash rate in Australia (Source: 2020) The trend in monthly cash rate target of Australia shows that there is an overtime declining trend. In order to give the economy necessary stimulus through monetary policy, Reserve Bank of Australia continuously lowered the cash rate with cash rate declines sharply from 14.00 in August 1990 to 0.75 in January 2020. RBA adjusted the cash rate with...

Read More arrow Tags: Australia 6 the global economy Deakin university 

ECOM4000 Economics Assignment Help

Download : 0 | Pages : 7

Answer: Micro Economics Economies of Scale refers to the advantages accrued by firms as the firms increase the level of production.(Chauhan, 2009)For example, in the beginning, the per capita cost for every seat of every airline is high. However, as the number of seats sold increases, the cost per unit or the marginal costs decreases. This is simply due to the fact that the fixed costs of running an air line are high. As the number of seats...

Read More arrow

Save Time & improve Grade

Just share Requriment and get customize Solution.

We will use e-mail only for:

arrow Communication regarding your orders

arrow To send you invoices, and other billing info

arrow To provide you with information of offers and other benefits




Overall Rating



Our Amazing Features


On Time Delivery

Our writers make sure that all orders are submitted, prior to the deadline.


Plagiarism Free Work

Using reliable plagiarism detection software, only provide customized 100 percent original papers.


24 X 7 Live Help

Feel free to contact our assignment writing services any time via phone, email or live chat.


Services For All Subjects

Our writers can provide you professional writing assistance on any subject at any level.


Best Price Guarantee

Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors.

Our Experts

Assignment writing guide
student rating student rating student rating student rating student rating 5/5

2632 Order Completed

100% Response Time

Albert Ambrosio

MSc in Nursing

London, United Kingdom

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

2279 Order Completed

97% Response Time

Zachary Perez

PhD in Computer Science and Information System

Washington, United States

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

1592 Order Completed

96% Response Time

Jane Sima

Ph.D in Psychology with Specialization in Industrial-Organizational Psychology

Singapore, Singapore

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

2115 Order Completed

97% Response Time

Kimberley Chen

MPA in Accounting

Singapore, Singapore

Hire Me

FREE Tools


Plagiarism Checker

Get all your documents checked for plagiarism or duplicacy with us.


Essay Typer

Get different kinds of essays typed in minutes with clicks.


GPA Calculator

Calculate your semester grades and cumulative GPa with our GPA Calculator.


Chemical Equation Balancer

Balance any chemical equation in minutes just by entering the formula.


Word Counter & Page Calculator

Calculate the number of words and number of pages of all your academic documents.

Refer Just 5 Friends to Earn More than $2000

Check your estimated earning as per your ability




Your Approx Earning

Live Review

Our Mission Client Satisfaction

Work clearly captured the differences and benefits of various forecasting methods. I made the right decision for help!


User Id: 383727 - 02 Jul 2020


student rating student rating student rating student rating student rating

at first i got the assignment in different company's name which was supposed to be Bearena pty ltd...i told them about this one and today i have received the same assignment, they have just change the company's is same...not a even single ...


User Id: 410147 - 02 Jul 2020


student rating student rating student rating student rating student rating

Great work, I appreciate such an excellent work. Great APA format and references. I will recommend you to my friends.


User Id: 400631 - 02 Jul 2020


student rating student rating student rating student rating student rating

Was on time .save by the bell.thank you so much.all exams was done. You guys are the best


User Id: 260883 - 02 Jul 2020


student rating student rating student rating student rating student rating
callback request mobile
Have any Query?