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January 2025 term · Managerial Economics · BSMS3033

Managerial Economics Quiz 2: 16 March 2025 (January 2025 term)

The IIT Madras BS Managerial Economics (Managerial Economics) Quiz 2 paper sat on 16 Mar 2025, in the January 2025 term: 30 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
30
Marks
25
Duration
120 min
MCQ
18
Numerical
9
Written
3
Take as mock testPractise with answers

Updated

Official paper: IIT M DEGREE AN EXAM QDB2 16 Mar 2025 · No negative marking.

Question 1

+0.5 marksOne correct option

Quasi-linear preferences are non-linear in both the goods

  1. A

    TRUE

  2. B

    FALSE

Show answer

Correct answer

  • B

    FALSE

Question 1 on its own page

Question 2

+0.5 marksOne correct option

Marginal utility changes for a monotonic transformation of the utility function

  1. A

    TRUE

  2. B

    FALSE

Show answer

Correct answer

  • A

    TRUE

Question 2 on its own page

Question 3

+0.5 marksOne correct option

MRS changes for a monotonic transformation of utility function

  1. A

    TRUE

  2. B

    FALSE

Show answer

Correct answer

  • B

    FALSE

Question 3 on its own page

Question 4

+0.5 marksOne correct option

The fraction of quantity tax paid by buyers rises as supply becomes more own-price elastic

  1. A

    TRUE

  2. B

    FALSE

Show answer

Correct answer

  • A

    TRUE

Question 4 on its own pageAlso asked in Quiz 2 12 Apr 2026

Question 5

+0.5 marksOne correct option

The fraction of quantity tax paid by buyers rises as demand becomes more own-price elastic

  1. A

    TRUE

  2. B

    FALSE

Show answer

Correct answer

  • B

    FALSE

Question 5 on its own pageAlso asked in Quiz 2 12 Apr 2026

Question 6

+0.5 marksOne correct option

A profit-maximizing monopoly will produce that output for which marginal cost equals marginal revenue

  1. A

    TRUE

  2. B

    FALSE

Show answer

Correct answer

  • A

    TRUE

Question 6 on its own page

Question 7

+0.5 marksOne correct option

A natural monopoly occurs when one firm can supply the entire market more cheaply than can a number of firms

  1. A

    TRUE

  2. B

    FALSE

Show answer

Correct answer

  • A

    TRUE

Question 7 on its own page

Question 8

+0.5 marksOne correct option

A monopolist always produces in the inelastic region of market demand curve

  1. A

    TRUE

  2. B

    FALSE

Show answer

Correct answer

  • B

    FALSE

Question 8 on its own pageAlso asked in Quiz 2 12 Apr 2026

Question 9

+0.5 marksOne correct option

Consider the following game matrix where only the payoff of player 1 is given.

Based on the above data, answer the given subquestions.

M weakly dominates T

  1. A

    TRUE

  2. B

    FALSE

Show answer

Correct answer

  • A

    TRUE

Question 9 on its own page

Question 10

+0.5 marksOne correct option

Consider the following game matrix where only the payoff of player 1 is given.

Based on the above data, answer the given subquestions.

B weakly dominates M

  1. A

    TRUE

  2. B

    FALSE

Show answer

Correct answer

  • A

    TRUE

Question 10 on its own page

Question 11

+1 markNumerical answer

Based on the above data, answer the given subquestions.

What is the profit-maximizing price per dose of Ageless (in $)?_____________

Show answer

Correct answer: 5

Question 11 on its own page

Question 12

+1 markOne correct option

Based on the above data, answer the given subquestions.

Choose the correct alternative.

  1. A

    R&D costs are sunk costs so do not enter the pricing decision

  2. B

    The elasticity of demand you face for Ageless is going to rise when your patent expires as many close substitutes to Ageless would be available

  3. C

    Both R&D costs are sunk costs so do not enter the pricing decision and The elasticity of demand you face for Ageless is going to rise when your patent expires as many close substitutes to Ageless would be available

  4. D

    None

Show answer

Correct answer

  • C

    Both R&D costs are sunk costs so do not enter the pricing decision and The elasticity of demand you face for Ageless is going to rise when your patent expires as many close substitutes to Ageless would be available

Question 12 on its own page

Question 13

+1 markOne correct option

Based on the above data, answer the given subquestions.

How many TAs will the university hire as a monopsonist

  1. A

    105

  2. B

    120

  3. C

    125

  4. D

    115

Show answer

Correct answer

  • A

    105

Question 13 on its own page

Question 14

+1 markOne correct option

Based on the above data, answer the given subquestions.

What wage will it pay to a TA

  1. A

    8632

  2. B

    8875

  3. C

    7868

  4. D

    9146

Show answer

Correct answer

  • B

    8875

Question 14 on its own page

Question 15

+1 markOne correct option

Based on the above data, answer the given subquestions.

What level of output (q) the firm will produce?

  1. A

    2

  2. B

    3

  3. C

    4

  4. D

    5

Show answer

Correct answer

  • B

    3

Question 15 on its own page

Question 16

+1 markOne correct option

Based on the above data, answer the given subquestions.

Producer surplus of the firm is

  1. A

    7

  2. B

    8

  3. C

    9

  4. D

    6

Show answer

Correct answer

  • C

    9

Question 16 on its own page

Question 17

+1 markOne correct option

Based on the above data, answer the given subquestions.

  1. A

    Positive economic profit

  2. B

    Negative economic profit

  3. C

    Zero economic profit

  4. D

    Cannot say

Show answer

Correct answer

  • A

    Positive economic profit

Question 17 on its own page

Question 18

+1 markOne correct option

Based on the above data, answer the given subquestions.

Choose the correct alternative

  1. A

    Marginal utility of x is independent of x

  2. B

    Marginal utility of y is independent of y

  3. C

    Both Marginal utility of x is independent of x and Marginal utility of y is independent of y

  4. D

    None

Show answer

Correct answer

  • C

    Both Marginal utility of x is independent of x and Marginal utility of y is independent of y

Question 18 on its own page

Question 19

+1 markOne correct option

Based on the above data, answer the given subquestions.

What is true about the optimal bundle of Narendra

  1. A

    The optimal bundle lies in interior

  2. B

    The optimal bundle lies on Y-axis

  3. C

    Budget line is a tangent to Narendra’s indifference curve at optimal bundle

  4. D

    None

Show answer

Correct answer

  • D

    None

Question 19 on its own page

Question 20

+1 markNumerical answer

Based on the above data, answer the given subquestions.

Optimal quantity of food is x*=_____________

Show answer

Correct answer: 10

Question 20 on its own page

Question 21

+1 markNumerical answer

Based on the above data, answer the given subquestions.

Optimal quantity of clothing is y*=_____________

Show answer

Correct answer: 0

Question 21 on its own page

Question 22

+1 markWritten answer

Based on the above data, answer the given subquestions.

Equilibrium quantity of cigarettes in the market before the incidence of tax will be Q^(*)=_____________

Show answer

Correct answer: 7 or 7000

Question 22 on its own page

Question 23

+1 markNumerical answer

Based on the above data, answer the given subquestions.

Equilibrium price of cigarettes in the market before the incidence of tax will be P^(*)=______________

Show answer

Correct answer: 3

Question 23 on its own page

Question 24

+1 markWritten answer

Based on the above data, answer the given subquestions.

New equilibrium quantity after the incidence of tax Q^(t)= ________________

Show answer

Correct answer: 6.5 or 6500

Question 24 on its own page

Question 25

+1 markNumerical answer

Based on the above data, answer the given subquestions.

Price that buyers pay now will be P^(B) =____________

Show answer

Correct answer: 3.5

Question 25 on its own page

Question 26

+1 markNumerical answer

Based on the above data, answer the given subquestions.

Price that seller receives per unit will be P^(s) = __________________

Show answer

Correct answer: 2.5

Question 26 on its own page

Question 27

+1 markWritten answer

Based on the above data, answer the given subquestions.

Suppose, the government acts weird and removes the tax to provide a subsidy of INR 1 per unit to cigarette producers.
New equilibrium quantity after the incidence of subsidy Q^(s)= _____________

Show answer

Correct answer: 7.5 or 7500

Question 27 on its own page

Question 28

+1 markNumerical answer

Based on the above data, answer the given subquestions.

Suppose, the government acts weird and removes the tax to provide a subsidy of INR 1 per unit to cigarette producers.
Price that buyers pay now will be P^(B)= _______________

Show answer

Correct answer: 2.5

Question 28 on its own page

Question 29

+1 markNumerical answer

Based on the above data, answer the given subquestions.

Suppose, the government acts weird and removes the tax to provide a subsidy of INR 1 per unit to cigarette producers.
Price that seller receives per unit (including subsidy) will be P^(s)= _____________

Show answer

Correct answer: 3.5

Question 29 on its own page

Question 30

+1 markNumerical answer

Based on the above data, answer the given subquestions.

Suppose, the government acts weird and removes the tax to provide a subsidy of INR 1 per unit to cigarette producers.
Total cost to the government will be ________________

Show answer

Correct answer: 7500

Question 30 on its own page