I would like to know if it is possible to have constant marginal costs (MC) in a business that is operating on a market, that is defined by monopolistic competition?
The company is a construction company, more specific a scaffolding company. My assumption is based on:
- They have invested in their building materials one time. This means that they have a natural limit on how much work they can do.
- They don't expect to buy more building materials in order to do more work, since they are also limited by number of employees.
- All employees are on a fixed salary.
- The only variable cost that is associated with each construction job is the transporation to/from site.
Since there is only one variable cost - the transportation, I am assuming that the marginal costs are constant, since transportation doesn't cost more whether they have 1 site (Q) or 10 sites (Q) to maintain.
Is this a valid assumption? Is it possible to have a constant MC such a market?