uiz Space

May 2025 term · Managerial Economics · BSMS3033

Managerial Economics Quiz 1: 13 July 2025 (May 2025 term)

The IIT Madras BS Managerial Economics (Managerial Economics) Quiz 1 paper sat on 13 Jul 2025, in the May 2025 term: 21 questions for 25 marks in 120 minutes. Every question is below with its answer. Take it as a timed mock test to be marked, or read it through first.

Questions
21
Marks
25
Duration
120 min
MCQ
10
Numerical
11
Take as mock testPractise with answers

Updated

Official paper: IIT M DEGREE AN EXAM QDB2 13 July 2025 · No negative marking.

Question 1

+1 markOne correct option

Imagine that you have started a snack food delivery business on your college campus. Students send you orders for snacks, such as potato chips and candy bars, via the Internet. You shop at local grocery stores to fill these orders and then deliver the orders. To operate this business, you pay $500 a month to lease computer time from a local Web-hosting company to use its server to host and maintain your website. You also own a sports utility vehicle (SUV) that you use to make deliveries. Your monthly car payment is $300, and you pay $100 a month in insurance costs. Each order that you fill takes, on average, a half hour and consumes $0.50 worth of gasoline. When you fill an order, you pay the grocer for the merchandise. You then collect a payment, including a delivery fee, from the students to whom you sell. If you did not operate this business, you could work at the campus dining hall, earning $6 an hour. Right now, you operate your business five days a week, Monday through Friday. On weekends, your business is idle, and you work in the campus dining hall.
Based on the above data, answer the given subquestions.

Your explicit costs include

  1. A

    Leasing computer time

  2. B

    Gasoline

  3. C

    Money you pay grocers

  4. D

    All of these

Show answer

Correct answer

  • D

    All of these

Question 1 on its own pageAlso asked in Quiz 1 23 Feb 2025, Quiz 1 15 Mar 2026

Question 2

+1 markOne correct option

Imagine that you have started a snack food delivery business on your college campus. Students send you orders for snacks, such as potato chips and candy bars, via the Internet. You shop at local grocery stores to fill these orders and then deliver the orders. To operate this business, you pay $500 a month to lease computer time from a local Web-hosting company to use its server to host and maintain your website. You also own a sports utility vehicle (SUV) that you use to make deliveries. Your monthly car payment is $300, and you pay $100 a month in insurance costs. Each order that you fill takes, on average, a half hour and consumes $0.50 worth of gasoline. When you fill an order, you pay the grocer for the merchandise. You then collect a payment, including a delivery fee, from the students to whom you sell. If you did not operate this business, you could work at the campus dining hall, earning $6 an hour. Right now, you operate your business five days a week, Monday through Friday. On weekends, your business is idle, and you work in the campus dining hall.
Based on the above data, answer the given subquestions.

Your implicit cost will be

  1. A

    $300 car payment

  2. B

    $100 a month insurance cost

  3. C

    Your wage at campus dining hall $6 an hour

  4. D

    All of these

Show answer

Correct answer

  • C

    Your wage at campus dining hall $6 an hour

Question 2 on its own pageAlso asked in Quiz 1 23 Feb 2025

Question 3

+1 markNumerical answer

Imagine that you have started a snack food delivery business on your college campus. Students send you orders for snacks, such as potato chips and candy bars, via the Internet. You shop at local grocery stores to fill these orders and then deliver the orders. To operate this business, you pay $500 a month to lease computer time from a local Web-hosting company to use its server to host and maintain your website. You also own a sports utility vehicle (SUV) that you use to make deliveries. Your monthly car payment is $300, and you pay $100 a month in insurance costs. Each order that you fill takes, on average, a half hour and consumes $0.50 worth of gasoline. When you fill an order, you pay the grocer for the merchandise. You then collect a payment, including a delivery fee, from the students to whom you sell. If you did not operate this business, you could work at the campus dining hall, earning $6 an hour. Right now, you operate your business five days a week, Monday through Friday. On weekends, your business is idle, and you work in the campus dining hall.
Based on the above data, answer the given subquestions.

Last week you purchased five large cases of Fritos for a customer who, as it turned out, did not accept delivery. You paid $200 for these cases. You have a deal with your grocers that they will pay you $0.5 for each dollar of returned merchandise. Just this week, you found a fraternity on campus that will buy the five cartons for $125 (and will pick them up from your apartment, relieving you of the need to deliver them to the frat house).
What is the opportunity cost of filling this order in $ (i.e., selling these cartons to the fraternity)? _______________

Show answer

Correct answer: 100

Question 3 on its own pageAlso asked in Quiz 1 15 Mar 2026

Question 4

+1 markOne correct option

Imagine that you have started a snack food delivery business on your college campus. Students send you orders for snacks, such as potato chips and candy bars, via the Internet. You shop at local grocery stores to fill these orders and then deliver the orders. To operate this business, you pay $500 a month to lease computer time from a local Web-hosting company to use its server to host and maintain your website. You also own a sports utility vehicle (SUV) that you use to make deliveries. Your monthly car payment is $300, and you pay $100 a month in insurance costs. Each order that you fill takes, on average, a half hour and consumes $0.50 worth of gasoline. When you fill an order, you pay the grocer for the merchandise. You then collect a payment, including a delivery fee, from the students to whom you sell. If you did not operate this business, you could work at the campus dining hall, earning $6 an hour. Right now, you operate your business five days a week, Monday through Friday. On weekends, your business is idle, and you work in the campus dining hall.
Based on the above data, answer the given subquestions.

Last week you purchased five large cases of Fritos for a customer who, as it turned out, did not accept delivery. You paid $200 for these cases. You have a deal with your grocers that they will pay you $0.5 for each dollar of returned merchandise. Just this week, you found a fraternity on campus that will buy the five cartons for $125 (and will pick them up from your apartment, relieving you of the need to deliver them to the frat house).
Should you sell the Fritos to the fraternity?______________

  1. A

    Yes

  2. B

    No

Show answer

Correct answer

  • A

    Yes

Question 4 on its own pageAlso asked in Quiz 1 15 Mar 2026

Question 5

+2 marksOne correct option

Answer the given subquestions for this consumer.

Choose the correct alternative

  1. A

    This consumer believes that more is better for each good, x and y

  2. B

    Marginal utility of the good x is independent of x and marginal utility of the good y is independent of y

  3. C

    Both this consumer believes that more is better for each good, x and y & Marginal utility of the good x is independent of x and marginal utility of the good y is independent of y

  4. D

    None

Show answer

Correct answer

  • A

    This consumer believes that more is better for each good, x and y

Question 5 on its own page

Question 6

+2 marksOne correct option

Answer the given subquestions for this consumer.

Choose the incorrect alternative

  1. A

    This consumer’s preferences exhibit a diminishing marginal utility of x

  2. B

    This consumer’s preferences exhibit a diminishing marginal utility of y

  3. C

    Both this consumer’s preferences exhibit a diminishing marginal utility of x & This consumer’s preferences exhibit a diminishing marginal utility of y

  4. D

    None

Show answer

Correct answer

  • B

    This consumer’s preferences exhibit a diminishing marginal utility of y

Question 6 on its own page

Question 7

+1 markOne correct option

Based on the above data, answer the given subquestions.

  1. A
  2. B
  3. C
  4. D
Show answer

Correct answer

  • A
Question 7 on its own page

Question 8

+1 markNumerical answer

Based on the above data, answer the given subquestions.

What is the cost-minimizing input combination if the firm wants to produce 1,000 units per year? L^(*)= ___________________

Show answer

Correct answer: 10

Question 8 on its own page

Question 9

+1 markNumerical answer

Based on the above data, answer the given subquestions.

What is the cost-minimizing input combination if the firm wants to produce 1,000 units per year? K^(*)= ______________

Show answer

Correct answer: 40

Question 9 on its own page

Question 10

+1 markNumerical answer

Based on the above data, answer the given subquestions.

What will be the average fixed cost if company produces 50 units ________________

Show answer

Correct answer: 6

Question 10 on its own page

Question 11

+1 markNumerical answer

Based on the above data, answer the given subquestions.

What is marginal cost of company at q=50? _____________

Show answer

Correct answer: 150

Question 11 on its own page

Question 12

+1 markNumerical answer

Based on the above data, answer the given subquestions.

What is average variable cost at q=50? _______________

Show answer

Correct answer: 100

Question 12 on its own page

Question 13

+1 markNumerical answer

Based on the above data, answer the given subquestions.

Marginal Product of Labour MPL is ________________

Show answer

Correct answer: 5

Question 13 on its own page

Question 14

+1 markNumerical answer

Based on the above data, answer the given subquestions.

Marginal Product of Capital MPK is ____________

Show answer

Correct answer: 2

Question 14 on its own page

Question 15

+2 marksNumerical answer

Based on the above data, answer the given subquestions.

Find the optimal input combination given that the firm wishes to produce 200 units of output. L^(*)= _______________

Show answer

Correct answer: 0

Question 15 on its own page

Question 16

+2 marksNumerical answer

Based on the above data, answer the given subquestions.

Find the optimal input combination given that the firm wishes to produce 200 units of output. K^(*)= ________________

Show answer

Correct answer: 100

Question 16 on its own page

Question 17

+1 markNumerical answer

Based on the above data, answer the given subquestions.

Total cost of production for 200 units of output will be (in $) _________________

Show answer

Correct answer: 200

Question 17 on its own page

Question 18

+1 markOne correct option

The Cobb-Douglas production function F(K,L)=K^(p)L^(q)

  1. A

    Never exhibits decreasing returns to scale

  2. B

    Shows constant returns to scale if p+q=1

  3. C

    Has constant marginal product of labour

  4. D

    Has constant marginal product of capital

Show answer

Correct answer

  • B

    Shows constant returns to scale if p+q=1

Question 18 on its own page

Question 19

+1 markOne correct option

When average product is decreasing in labor, marginal product is greater than average product.

  1. A

    TRUE

  2. B

    FALSE

Show answer

Correct answer

  • B

    FALSE

Question 19 on its own pageAlso asked in Quiz 1 15 Mar 2026

Question 20

+1 markOne correct option

When average product is increasing in labor, marginal product is less than average product.

  1. A

    TRUE

  2. B

    FALSE

Show answer

Correct answer

  • B

    FALSE

Question 20 on its own pageAlso asked in Quiz 1 15 Mar 2026

Question 21

+1 markOne correct option

When average product APL is at a maximum, then marginal product is equal to average product

  1. A

    TRUE

  2. B

    FALSE

Show answer

Correct answer

  • A

    TRUE

Question 21 on its own page