ECON 102 FINAL EXAM - QUESTIONS AND ANSWERS | WITH ACTUAL
SOLUTIONS.
Suppose that a monopolistically competitive firm must build a production facility in order to produce a
product. The fixed cost of this facility is FC = $24. Also, the firm has constant marginal cost, MC = $3.
Demand for the product that the firm produces is given by P = 27-3Q.
Calculate the missing values in the following table below. Missing values are denoted by a number inside
a bracket [X]. Some numbers have been filled in for you. Place your answers in the corresponding
numbered fields below the table. Hint: All answers that you fill in will be integers (no decimals). Be sure
to just type the numbers and do not type in dollar signs. If you enter negative numbers, be sure to
include a minus sign (-) to the left of the number. - (answer)1. 24
2. 21
3. 18
4. 15
5. 12
6. 9
7. 6
8. 3
9. 0
10. 27
11. 30
12. 33
13. 36
14. 39
15. 42
16. 45
17. 48
18. 51
19. 27
20. 15
21. 11
,ECON 102 FINAL EXAM - QUESTIONS AND ANSWERS | WITH ACTUAL
SOLUTIONS.
22. 9
23. 7
24. 6
25. 24
26. 42
27. 54
28. 60
29. 60
30. 54
31. 42
32. 24
33. 0
34. -3
35. 12
36. 21
37. 24
38. 21
39. 12
40. -3
41. -24
42. -51
Enter just a number to answer this problem. How many units of output will the firm produce if
maximizes its profit? - (answer)4
Enter just a number to answer this problem. What price should this firm charge if it wants to maximize
its profit? - (answer)15
, ECON 102 FINAL EXAM - QUESTIONS AND ANSWERS | WITH ACTUAL
SOLUTIONS.
Monopolistic competition differs from perfect competition primarily because in monopolistic
competition, - (answer)firms can differentiate their products.
The demand facing a monopolistically competitive firm is ________ a monopoly firm and ________ a
perfectly competitive firm. - (answer)more elastic than; less elastic than
If firms in a monopolistically competitive industry are earning economic profits, then in the long run -
(answer)new firms producing close substitutes will enter the industry and this entry will continue until
economic profits are eliminated.
For a monopolistically competitive firm in long-run equilibrium, - (answer)at the profit-maximizing
quantity, the demand curve must be tangent to the average total cost curve.
We know that monopolistically competitive firms prevent the efficient use of resources because they
produce where - (answer)P > MC.
When monopolistically competitive firms earn ________ economic profits, other firms ________ an
industry in the long run. - (answer)positive; enter
Firms will ________ a monopolistically competitive market until ________ are eliminated. -
(answer)enter; profits
When MR = MC and P = ATC for a monopolistically competitive firm, the firm is in - (answer)long‐run
equilibrium.
Refer to the graph above, which represents the demand and cost curves for Neat and Trim Barber Shop,
a monopolistically competitive firm. The profit-maximizing number of haircuts for the Barber Shop is -
(answer)20
Refer to the graph again. The profit-maximizing price of haircuts by Neat and Trim is - (answer)$16
SOLUTIONS.
Suppose that a monopolistically competitive firm must build a production facility in order to produce a
product. The fixed cost of this facility is FC = $24. Also, the firm has constant marginal cost, MC = $3.
Demand for the product that the firm produces is given by P = 27-3Q.
Calculate the missing values in the following table below. Missing values are denoted by a number inside
a bracket [X]. Some numbers have been filled in for you. Place your answers in the corresponding
numbered fields below the table. Hint: All answers that you fill in will be integers (no decimals). Be sure
to just type the numbers and do not type in dollar signs. If you enter negative numbers, be sure to
include a minus sign (-) to the left of the number. - (answer)1. 24
2. 21
3. 18
4. 15
5. 12
6. 9
7. 6
8. 3
9. 0
10. 27
11. 30
12. 33
13. 36
14. 39
15. 42
16. 45
17. 48
18. 51
19. 27
20. 15
21. 11
,ECON 102 FINAL EXAM - QUESTIONS AND ANSWERS | WITH ACTUAL
SOLUTIONS.
22. 9
23. 7
24. 6
25. 24
26. 42
27. 54
28. 60
29. 60
30. 54
31. 42
32. 24
33. 0
34. -3
35. 12
36. 21
37. 24
38. 21
39. 12
40. -3
41. -24
42. -51
Enter just a number to answer this problem. How many units of output will the firm produce if
maximizes its profit? - (answer)4
Enter just a number to answer this problem. What price should this firm charge if it wants to maximize
its profit? - (answer)15
, ECON 102 FINAL EXAM - QUESTIONS AND ANSWERS | WITH ACTUAL
SOLUTIONS.
Monopolistic competition differs from perfect competition primarily because in monopolistic
competition, - (answer)firms can differentiate their products.
The demand facing a monopolistically competitive firm is ________ a monopoly firm and ________ a
perfectly competitive firm. - (answer)more elastic than; less elastic than
If firms in a monopolistically competitive industry are earning economic profits, then in the long run -
(answer)new firms producing close substitutes will enter the industry and this entry will continue until
economic profits are eliminated.
For a monopolistically competitive firm in long-run equilibrium, - (answer)at the profit-maximizing
quantity, the demand curve must be tangent to the average total cost curve.
We know that monopolistically competitive firms prevent the efficient use of resources because they
produce where - (answer)P > MC.
When monopolistically competitive firms earn ________ economic profits, other firms ________ an
industry in the long run. - (answer)positive; enter
Firms will ________ a monopolistically competitive market until ________ are eliminated. -
(answer)enter; profits
When MR = MC and P = ATC for a monopolistically competitive firm, the firm is in - (answer)long‐run
equilibrium.
Refer to the graph above, which represents the demand and cost curves for Neat and Trim Barber Shop,
a monopolistically competitive firm. The profit-maximizing number of haircuts for the Barber Shop is -
(answer)20
Refer to the graph again. The profit-maximizing price of haircuts by Neat and Trim is - (answer)$16
