Managerial Economics End Term: 10 May 2026, Set 1-2 (January 2026 term)

The market for paper in southern region in the India is characterized by the following demand and supply curves: QD = 160,000−2000P and QS = 40,000+2000P, where QD is the quantity demanded in 100-pound lots, QS is the quantity supplied in 100-pound lots, and P is the price per 100-pound lot. Currently there is no attempt to regulate the dumping of effluent into streams and rivers by paper mills. As a result, dumping is widespread. The Marginal External Cost (MEC) associated with the production of paper is given by the curve MEC = 0.0006QS.
Based on the above data, answer the given subquestions.

Calculate the output of paper if it is produced under competitive conditions and no attempt is made to monitor or regulate the dumping of effluent. Q = __________

The market for paper in southern region in the India is characterized by the following demand and supply curves: QD = 160,000−2000P and QS = 40,000+2000P, where QD is the quantity demanded in 100-pound lots, QS is the quantity supplied in 100-pound lots, and P is the price per 100-pound lot. Currently there is no attempt to regulate the dumping of effluent into streams and rivers by paper mills. As a result, dumping is widespread. The Marginal External Cost (MEC) associated with the production of paper is given by the curve MEC = 0.0006QS.
Based on the above data, answer the given subquestions.

Calculate the Price of paper if it is produced under competitive conditions and no attempt is made to monitor or regulate the dumping of effluent. P = ___________

The market for paper in southern region in the India is characterized by the following demand and supply curves: QD = 160,000−2000P and QS = 40,000+2000P, where QD is the quantity demanded in 100-pound lots, QS is the quantity supplied in 100-pound lots, and P is the price per 100-pound lot. Currently there is no attempt to regulate the dumping of effluent into streams and rivers by paper mills. As a result, dumping is widespread. The Marginal External Cost (MEC) associated with the production of paper is given by the curve MEC = 0.0006QS.
Based on the above data, answer the given subquestions.

Determine the socially efficient price of the paper. P = ________

The market for paper in southern region in the India is characterized by the following demand and supply curves: QD = 160,000−2000P and QS = 40,000+2000P, where QD is the quantity demanded in 100-pound lots, QS is the quantity supplied in 100-pound lots, and P is the price per 100-pound lot. Currently there is no attempt to regulate the dumping of effluent into streams and rivers by paper mills. As a result, dumping is widespread. The Marginal External Cost (MEC) associated with the production of paper is given by the curve MEC = 0.0006QS.
Based on the above data, answer the given subquestions.

Determine the socially efficient quantity of the paper. Q = _________

Bharat Airlines (BA) flies only one route: Delhi-Chennai. The demand for each flight is Q=600-2P. BA’s total cost of running each flight includes a fixed cost of 20000 and a variable cost of 90 per passenger.
Based on the above data, answer the given subquestions.

What is the profit maximizing price that BA will charge?

Bharat Airlines (BA) flies only one route: Delhi-Chennai. The demand for each flight is Q=600-2P. BA’s total cost of running each flight includes a fixed cost of 20000 and a variable cost of 90 per passenger.
Based on the above data, answer the given subquestions.

How many passengers will be on each flight in equilibrium?

Bharat Airlines (BA) flies only one route: Delhi-Chennai. The demand for each flight is Q=600-2P. BA’s total cost of running each flight includes a fixed cost of 20000 and a variable cost of 90 per passenger.
Based on the above data, answer the given subquestions.

What is BA’s profit for each flight?

Bharat Airlines (BA) flies only one route: Delhi-Chennai. The demand for each flight is Q=600-2P. BA’s total cost of running each flight includes a fixed cost of 20000 and a variable cost of 90 per passenger.
Based on the above data, answer the given subquestions.

Now, suppose BA realizes that the fixed costs per flight are in fact 25000 instead of 20000. It also finds out that two different types of passengers fly to Chennai. Type A consists of business people with a demand of QA=520-0.8P and type B consists of students with a demand of QB=240-0.4P. BA decides to charge these two types different prices.
The market demand curve will have a kink at

Bharat Airlines (BA) flies only one route: Delhi-Chennai. The demand for each flight is Q=600-2P. BA’s total cost of running each flight includes a fixed cost of 20000 and a variable cost of 90 per passenger.
Based on the above data, answer the given subquestions.

Now, suppose BA realizes that the fixed costs per flight are in fact 25000 instead of 20000. It also finds out that two different types of passengers fly to Chennai. Type A consists of business people with a demand of QA=520-0.8P and type B consists of students with a demand of QB=240-0.4P. BA decides to charge these two types different prices.
The price that BA charge the students is PB= ________

Bharat Airlines (BA) flies only one route: Delhi-Chennai. The demand for each flight is Q=600-2P. BA’s total cost of running each flight includes a fixed cost of 20000 and a variable cost of 90 per passenger.
Based on the above data, answer the given subquestions.

Now, suppose BA realizes that the fixed costs per flight are in fact 25000 instead of 20000. It also finds out that two different types of passengers fly to Chennai. Type A consists of business people with a demand of QA=520-0.8P and type B consists of students with a demand of QB=240-0.4P. BA decides to charge these two types different prices.
The price that BA charge the business people is PA= __________

Bharat Airlines (BA) flies only one route: Delhi-Chennai. The demand for each flight is Q=600-2P. BA’s total cost of running each flight includes a fixed cost of 20000 and a variable cost of 90 per passenger.
Based on the above data, answer the given subquestions.

Now, suppose BA realizes that the fixed costs per flight are in fact 25000 instead of 20000. It also finds out that two different types of passengers fly to Chennai. Type A consists of business people with a demand of QA=520-0.8P and type B consists of students with a demand of QB=240-0.4P. BA decides to charge these two types different prices.
Profit maximizing quantity for both groups will be QA= ___________

Bharat Airlines (BA) flies only one route: Delhi-Chennai. The demand for each flight is Q=600-2P. BA’s total cost of running each flight includes a fixed cost of 20000 and a variable cost of 90 per passenger.
Based on the above data, answer the given subquestions.

Now, suppose BA realizes that the fixed costs per flight are in fact 25000 instead of 20000. It also finds out that two different types of passengers fly to Chennai. Type A consists of business people with a demand of QA=520-0.8P and type B consists of students with a demand of QB=240-0.4P. BA decides to charge these two types different prices.
Profit maximizing quantity for both groups will be QB= ______

Bharat Airlines (BA) flies only one route: Delhi-Chennai. The demand for each flight is Q=600-2P. BA’s total cost of running each flight includes a fixed cost of 20000 and a variable cost of 90 per passenger.
Based on the above data, answer the given subquestions.

Now, suppose BA realizes that the fixed costs per flight are in fact 25000 instead of 20000. It also finds out that two different types of passengers fly to Chennai. Type A consists of business people with a demand of QA=520-0.8P and type B consists of students with a demand of QB=240-0.4P. BA decides to charge these two types different prices.
The profit of BA for each flight will be = ________

Bharat Airlines (BA) flies only one route: Delhi-Chennai. The demand for each flight is Q=600-2P. BA’s total cost of running each flight includes a fixed cost of 20000 and a variable cost of 90 per passenger.
Based on the above data, answer the given subquestions.

Now, suppose BA realizes that the fixed costs per flight are in fact 25000 instead of 20000. It also finds out that two different types of passengers fly to Chennai. Type A consists of business people with a demand of QA=520-0.8P and type B consists of students with a demand of QB=240-0.4P. BA decides to charge these two types different prices.
What is the total consumer surplus? CStotal = _________

The production function for a product is given by q = 450KL. If the price of capital is INR 30 per day and the price of labour is INR 150 per day.
Based on the above data, answer the given subquestions.

What is the cost minimizing quantity of labour and capital respectively for producing 9000 units of output? L* = ________

The production function for a product is given by q = 450KL. If the price of capital is INR 30 per day and the price of labour is INR 150 per day.
Based on the above data, answer the given subquestions.

What is the cost minimizing quantity of labour and capital respectively for producing 9000 units of output? K* = __________

The production function for a product is given by q = 450KL. If the price of capital is INR 30 per day and the price of labour is INR 150 per day.
Based on the above data, answer the given subquestions.

What is the minimum cost of producing 9000 units of output in INR?

Consider two investment opportunities in new products: gourmet marmite and gourmet honey. People might either really like or really dislike the gourmet marmite, so it generates a payoff of $0.5 with 30 percent probability, a payoff of $1 million with 40 percent probability and a payoff of $1.5 million with 30 percent probability. The gourmet honey is less likely to either really turn people off or really turn them on, so it has a payoff of $0.5 million with 20 percent probability, $1 million with 60 percent probability and $1.5 million with 20 percent probability.
Based on the above data, answer the given subquestions.

Expected value of first product is ___________
NOTE: Enter the exact answer without any extra space in the beginning or at the end. Answers Case Sensitive : No

Consider two investment opportunities in new products: gourmet marmite and gourmet honey. People might either really like or really dislike the gourmet marmite, so it generates a payoff of $0.5 with 30 percent probability, a payoff of $1 million with 40 percent probability and a payoff of $1.5 million with 30 percent probability. The gourmet honey is less likely to either really turn people off or really turn them on, so it has a payoff of $0.5 million with 20 percent probability, $1 million with 60 percent probability and $1.5 million with 20 percent probability.
Based on the above data, answer the given subquestions.

Expected value of second product is _____________
NOTE: Enter the exact answer without any extra space in the beginning or at the end. Answers Case Sensitive : No

Consider two investment opportunities in new products: gourmet marmite and gourmet honey. People might either really like or really dislike the gourmet marmite, so it generates a payoff of $0.5 with 30 percent probability, a payoff of $1 million with 40 percent probability and a payoff of $1.5 million with 30 percent probability. The gourmet honey is less likely to either really turn people off or really turn them on, so it has a payoff of $0.5 million with 20 percent probability, $1 million with 60 percent probability and $1.5 million with 20 percent probability.
Based on the above data, answer the given subquestions.

Choose the correct alternative(s)

Consider two investment opportunities in new products: gourmet marmite and gourmet honey. People might either really like or really dislike the gourmet marmite, so it generates a payoff of $0.5 with 30 percent probability, a payoff of $1 million with 40 percent probability and a payoff of $1.5 million with 30 percent probability. The gourmet honey is less likely to either really turn people off or really turn them on, so it has a payoff of $0.5 million with 20 percent probability, $1 million with 60 percent probability and $1.5 million with 20 percent probability.
Based on the above data, answer the given subquestions.

India currently imports all of its palm oil. The annual demand for palm oil by Indian consumers is given by the demand curve Q=2000-4P, where Q is quantity of palm oil in thousand litres and P is market price in INR per litre. World producers can harvest and ship palm oil to Indian distributors at a constant marginal cost (=average cost) of INR 50 and Indian distributors can distribute it at a cost of INR 10 per litre. Consider market for palm oil to be competitive. Indian government is considering a tariff on palm oil import of INR 10 per litre. Answer the given subquestions.

If there is no tariff, what is the quantity demanded (in thousand litres) ____________

India currently imports all of its palm oil. The annual demand for palm oil by Indian consumers is given by the demand curve Q=2000-4P, where Q is quantity of palm oil in thousand litres and P is market price in INR per litre. World producers can harvest and ship palm oil to Indian distributors at a constant marginal cost (=average cost) of INR 50 and Indian distributors can distribute it at a cost of INR 10 per litre. Consider market for palm oil to be competitive. Indian government is considering a tariff on palm oil import of INR 10 per litre. Answer the given subquestions.

If the tariff is imposed, how much a consumer will pay for a litre of palm oil ______________

India currently imports all of its palm oil. The annual demand for palm oil by Indian consumers is given by the demand curve Q=2000-4P, where Q is quantity of palm oil in thousand litres and P is market price in INR per litre. World producers can harvest and ship palm oil to Indian distributors at a constant marginal cost (=average cost) of INR 50 and Indian distributors can distribute it at a cost of INR 10 per litre. Consider market for palm oil to be competitive. Indian government is considering a tariff on palm oil import of INR 10 per litre. Answer the given subquestions.

What is the new quantity demanded now (in thousand litres)? ____________

India currently imports all of its palm oil. The annual demand for palm oil by Indian consumers is given by the demand curve Q=2000-4P, where Q is quantity of palm oil in thousand litres and P is market price in INR per litre. World producers can harvest and ship palm oil to Indian distributors at a constant marginal cost (=average cost) of INR 50 and Indian distributors can distribute it at a cost of INR 10 per litre. Consider market for palm oil to be competitive. Indian government is considering a tariff on palm oil import of INR 10 per litre. Answer the given subquestions.

What will be the lost consumer surplus due to the imposed tariff (in thousand INR) _____________

India currently imports all of its palm oil. The annual demand for palm oil by Indian consumers is given by the demand curve Q=2000-4P, where Q is quantity of palm oil in thousand litres and P is market price in INR per litre. World producers can harvest and ship palm oil to Indian distributors at a constant marginal cost (=average cost) of INR 50 and Indian distributors can distribute it at a cost of INR 10 per litre. Consider market for palm oil to be competitive. Indian government is considering a tariff on palm oil import of INR 10 per litre. Answer the given subquestions.

Tax revenue for the government will be (in thousand INR) ____________

India currently imports all of its palm oil. The annual demand for palm oil by Indian consumers is given by the demand curve Q=2000-4P, where Q is quantity of palm oil in thousand litres and P is market price in INR per litre. World producers can harvest and ship palm oil to Indian distributors at a constant marginal cost (=average cost) of INR 50 and Indian distributors can distribute it at a cost of INR 10 per litre. Consider market for palm oil to be competitive. Indian government is considering a tariff on palm oil import of INR 10 per litre. Answer the given subquestions.

Tariff results in

Based on the above data, answer the given subquestions.

Find the optimal bundle of goods 1 and 2 for this consumer. The optimal bundle will consist of X1 = ___________

Based on the above data, answer the given subquestions.

Find the optimal bundle of goods 1 and 2 for this consumer. The optimal bundle will consist of X2 = ___________

A monopolist with marginal cost, MC = 10+6Q, faces a demand curve P = 20 - 2Q. Answer the given subquestions based on this information.

The slope of the marginal revenue curve is ____________

A monopolist with marginal cost, MC = 10+6Q, faces a demand curve P = 20 - 2Q. Answer the given subquestions based on this information.

Profit-maximizing price for this monopolist is __________

A monopolist with marginal cost, MC = 10+6Q, faces a demand curve P = 20 - 2Q. Answer the given subquestions based on this information.

Profit-maximizing quantity for this monopolist is ___________

A monopolist with marginal cost, MC = 10+6Q, faces a demand curve P = 20 - 2Q. Answer the given subquestions based on this information.

The price elasticity of demand at the profit-maximizing point is _____________

What is true about monopolistic competition

Adverse selection occurs when

Moral hazard occurs when contracts are written in such a way that