The IIT Madras BS Managerial Economics (Managerial Economics) Quiz 2 paper sat on 4 Aug 2024, in the May 2024 term: 17 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.
Choose the incorrect statement
Quasi linear preferences are linear in one good and non-linear in other good
Marginal utility does not change for a monotonic transformation of the utility function
MRS does not change for a monotonic transformation of utility function
All of these
Correct answer
Marginal utility does not change for a monotonic transformation of the utility function
Choose the correct alternative
The fraction of quantity tax paid by buyers rises as supply becomes more own- price elastic
The fraction of quantity tax paid by buyers rises as demand becomes less own- price elastic
Both The fraction of quantity tax paid by buyers rises as supply becomes more own-price elastic and The fraction of quantity tax paid by buyers rises as demand becomes less own-price elastic
None of these
Correct answer
Both The fraction of quantity tax paid by buyers rises as supply becomes more own-price elastic and The fraction of quantity tax paid by buyers rises as demand becomes less own-price elastic
Choose the correct alternative about a monopolist
A profit-maximizing monopoly will produce that output for which marginal cost equals marginal revenue
A natural monopoly occurs when one firm can supply the entire market more cheaply than can a number of firms
A monopolist always produces in the elastic region of market demand curve
All of these
Correct answer
All of these
Consider the following two statements:
I. Peak load pricing is a form of price discrimination.
II. It makes consumers worse off.
Choose the True statements:
I
II
I and II both
None of these
Correct answer
I
Nash equilibrium in this game is (are)
(D, R)
(U, L)
Both (D, R) and (U,L)
None of these
Correct answer
Both (D, R) and (U,L)
Based on the above data, answer the given subquestions.
Choose the correct alternative
Marginal utility of x is independent of y
Marginal utility of y is independent of y
Both Marginal utility of x is independent of y and Marginal utility of y is independent of y
None of these
Correct answer
Marginal utility of y is independent of y
Based on the above data, answer the given subquestions.
What is true about the optimal bundle of Mohan
The optimal bundle lies in interior
The optimal bundle is at a corner point
Budget line is a tangent to Mohan’s indifference curve at optimal bundle
None of these
Correct answer
The optimal bundle is at a corner point
Based on the above data, answer the given subquestions.
Optimal quantity of food is x*=___________________
Correct answer: 10
Based on the above data, answer the given subquestions.
Optimal quantity of clothing is y*=___________________
Correct answer: 0
Based on the above data, answer the given subquestions.
How many TAs will the university hire as a monopsonist
105
120
125
115
Correct answer
105
Based on the above data, answer the given subquestions.
What wage will it pay to a TA
8632
8875
7868
9146
Correct answer
8875
Based on the above data, answer the given subquestions.
What is the size of the excess supply in the market with the price floor? _________________________
Correct answer: 6
Based on the above data, answer the given subquestions.
What is the consumer surplus?______________________
Correct answer: 16
Based on the above data, answer the given subquestions.
What is the producer surplus?_____________________
Correct answer: 32
Based on the above data, answer the given subquestions.
What is the deadweight loss?_____________________
Correct answer: 6
After spending 10 years and $1.5 billion, you have finally gotten Food and Drug Administration (FDA) approval to sell your new patented wonder drug, which reduces the aches and pains associated with aging joints. You will market this drug under the brand name of Ageless. Market research indicates that the elasticity of demand for Ageless is 1.25 (at all points on the demand curve). You estimate the marginal cost of manufacturing and selling one additional dose of Ageless is $1.
Based on the above data, answer the given subquestions.
What is the profit-maximizing price per dose of Ageless (in $)?________________________
Correct answer: 5
After spending 10 years and $1.5 billion, you have finally gotten Food and Drug Administration (FDA) approval to sell your new patented wonder drug, which reduces the aches and pains associated with aging joints. You will market this drug under the brand name of Ageless. Market research indicates that the elasticity of demand for Ageless is 1.25 (at all points on the demand curve). You estimate the marginal cost of manufacturing and selling one additional dose of Ageless is $1.
Based on the above data, answer the given subquestions.
Choose the correct alternative
R&D costs are sunk costs so do not enter the pricing decision
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
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
None of these
Correct answer
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
