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January 2024 term · Managerial Economics · BSMS3033

Managerial Economics Quiz 2: 24 March 2024 (January 2024 term)

The IIT Madras BS Managerial Economics (Managerial Economics) Quiz 2 paper sat on 24 Mar 2024, in the January 2024 term: 18 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
18
Marks
25
Duration
120 min
MCQ
11
Numerical
7
Take as mock testPractise with answers

Updated

Official paper: IIT M DEGREE AN EXAM QDB2 24 Mar 2024 · No negative marking.

Question 1

+1 markOne correct option

Choose the correct statement

  1. A

    Quasi linear preferences are linear in one good and non‐linear in other good

  2. B

    Marginal utility changes for a monotonic transformation of the utility function

  3. C

    MRS does not change for a monotonic transformation of utility function

  4. D

    All of these

Show answer

Correct answer

  • D

    All of these

Question 1 on its own page

Question 2

+1 markOne correct option

Choose the correct alternative

  1. A

    The fraction of quantity tax paid by buyers rises as supply becomes less own‐ price elastic

  2. B

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

  3. C

    Both the fraction of quantity tax paid by buyers rises as supply becomes less own‐price elastic & the fraction of quantity tax paid by buyers rises as demand becomes more own‐price elastic

  4. D

    None

Show answer

Correct answer

  • D

    None

Question 2 on its own page

Question 3

+1 markOne correct option

Choose the correct alternative about a monopolist

  1. A

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

  2. B

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

  3. C

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

  4. D

    All of these

Show answer

Correct answer

  • D

    All of these

Question 3 on its own page

Question 4

+1 markOne correct option

Consider following two statements
I. Peak load pricing is a form of price discrimination.
II. It makes consumers better off.
Choose the True statements:

  1. A

    I

  2. B

    II

  3. C

    Both I and II

  4. D

    None

Show answer

Correct answer

  • C

    Both I and II

Question 4 on its own page

Question 5

+1 markOne correct option

Based on the above data, answer the given subquestions.

How many strategies/actions of Airbus are strictly dominated

  1. A

    1

  2. B

    2

  3. C

    3

  4. D

    4

Show answer

Correct answer

  • C

    3

Question 5 on its own page

Question 6

+1 markOne correct option

Based on the above data, answer the given subquestions.

Dominant strategy equilibrium of this game will be

  1. A

    ($8.5, $10.5)

  2. B

    ($8.5, $11.5)

  3. C

    ($8.5, $12.5)

  4. D

    ($8.5, $13.5)

Show answer

Correct answer

  • C

    ($8.5, $12.5)

Question 6 on its own page

Question 7

+2 marksNumerical 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 7 on its own page

Question 8

+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

  4. D

    None

Show answer

Correct answer

  • C

    Both

Question 8 on its own page

Question 9

+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 y

  2. B

    Marginal utility of y is independent of y

  3. C

    Both

  4. D

    None

Show answer

Correct answer

  • B

    Marginal utility of y is independent of y

Question 9 on its own page

Question 10

+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 is at a corner point

  3. C

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

  4. D

    None

Show answer

Correct answer

  • B

    The optimal bundle is at a corner point

Question 10 on its own page

Question 11

+1 markNumerical answer

Based on the above data, answer the given subquestions.

Optimal quantity of food is x*=___________________

Show answer

Correct answer: 10

Question 11 on its own page

Question 12

+1 markNumerical answer

Based on the above data, answer the given subquestions.

Optimal quantity of clothing is y*=___________

Show answer

Correct answer: 0

Question 12 on its own page

Question 13

+2 marksOne 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

+2 marksOne 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

+2 marksNumerical answer

The demand and supply curves in a market are

Qd=10−0.5Pd\boldsymbol{Q^d = 10 - 0.5P^d}

Qs={−2+Ps,When Ps≥20,When Ps<2\boldsymbol{Q^s} = \begin{cases} \boldsymbol{-2 + P^s,} & \boldsymbol{When\ P^s \geq 2} \\ \boldsymbol{0,} & \boldsymbol{When\ P^s < 2} \end{cases}

where Qd\boldsymbol{Q^d} is the quantity demanded when the price consumers pay is Pd\boldsymbol{P^d}, and Qs\boldsymbol{Q^s} is the quantity supplied when the price producers receive is Ps\boldsymbol{P^s}. Suppose, the government imposes a price ceiling of $6 in the market.

Based on the above data, answer the given subquestions.

What is the size of the shortage in the market with the price ceiling? ……………………..

Show answer

Correct answer: 3

Question 15 on its own page

Question 16

+2 marksNumerical answer

The demand and supply curves in a market are

Qd=10−0.5Pd\boldsymbol{Q^d = 10 - 0.5P^d}

Qs={−2+Ps,When Ps≥20,When Ps<2\boldsymbol{Q^s} = \begin{cases} \boldsymbol{-2 + P^s,} & \boldsymbol{When\ P^s \geq 2} \\ \boldsymbol{0,} & \boldsymbol{When\ P^s < 2} \end{cases}

where Qd\boldsymbol{Q^d} is the quantity demanded when the price consumers pay is Pd\boldsymbol{P^d}, and Qs\boldsymbol{Q^s} is the quantity supplied when the price producers receive is Ps\boldsymbol{P^s}. Suppose, the government imposes a price ceiling of $6 in the market.

Based on the above data, answer the given subquestions.

What is the producer surplus?..........................

Show answer

Correct answer: 8

Question 16 on its own page

Question 17

+2 marksNumerical answer

The demand and supply curves in a market are

Qd=10−0.5Pd\boldsymbol{Q^d = 10 - 0.5P^d}

Qs={−2+Ps,When Ps≥20,When Ps<2\boldsymbol{Q^s} = \begin{cases} \boldsymbol{-2 + P^s,} & \boldsymbol{When\ P^s \geq 2} \\ \boldsymbol{0,} & \boldsymbol{When\ P^s < 2} \end{cases}

where Qd\boldsymbol{Q^d} is the quantity demanded when the price consumers pay is Pd\boldsymbol{P^d}, and Qs\boldsymbol{Q^s} is the quantity supplied when the price producers receive is Ps\boldsymbol{P^s}. Suppose, the government imposes a price ceiling of $6 in the market.

Based on the above data, answer the given subquestions.

What is the consumer surplus?..........................

Show answer

Correct answer: 40

Question 17 on its own page

Question 18

+2 marksNumerical answer

The demand and supply curves in a market are

Qd=10−0.5Pd\boldsymbol{Q^d = 10 - 0.5P^d}

Qs={−2+Ps,When Ps≥20,When Ps<2\boldsymbol{Q^s} = \begin{cases} \boldsymbol{-2 + P^s,} & \boldsymbol{When\ P^s \geq 2} \\ \boldsymbol{0,} & \boldsymbol{When\ P^s < 2} \end{cases}

where Qd\boldsymbol{Q^d} is the quantity demanded when the price consumers pay is Pd\boldsymbol{P^d}, and Qs\boldsymbol{Q^s} is the quantity supplied when the price producers receive is Ps\boldsymbol{P^s}. Suppose, the government imposes a price ceiling of $6 in the market.

Based on the above data, answer the given subquestions.

What is the deadweight loss?..........

Show answer

Correct answer: 6

Question 18 on its own page