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Principles of Economics Quiz 1: Undated (undated)

Question 1

+1 markOne correct option

A textile firm in Surat has already spent Rs. 8 lakh on a half-built showroom. Completing it requires an additional Rs. 2 lakh and will generate Rs. 5 lakh in revenue. An economist advising the firm should recommend:

  1. A

    Abandon — total cost (Rs. 10 lakh) exceeds revenue (Rs. 5 lakh)

  2. B

    Complete — marginal benefit (Rs. 5 lakh) exceeds marginal cost (Rs. 2 lakh), a net gain of Rs. 3 lakh

  3. C

    Abandon — the Rs. 8 lakh already spent cannot be recovered

  4. D

    Complete only if the Rs. 8 lakh can be recouped from another buyer

Question 2

+1 markOne correct option

A multiplex in Pune screens a film at a fixed cost of Rs. 40,000, with 20 empty seats just before showtime. The marginal cost of admitting one more viewer (electricity, cleaning) is Rs. 15. A student offers Rs. 90. The average cost per seat is Rs. 200. The manager should:

  1. A

    Reject: Rs. 90 is far below the average cost of Rs. 200.

  2. B

    Accept: marginal benefit (Rs. 90) exceeds marginal cost (Rs. 15), a marginal profit of Rs. 75.

  3. C

    Accept only if the student pays the average cost of Rs. 200.

  4. D

    Reject — selling below average cost sets a bad precedent.

Question 3

+1 markOne correct option

Kavya quits a job paying Rs. 9,00,000 per year to run a startup. To fund it she also withdraws Rs. 3,00,000 from a fixed deposit that was earning 8% annual interest (the Rs. 3,00,000 itself becomes business assets she still owns). Her annual opportunity cost is:

  1. A

    Rs. 9,00,000 (forgone salary only).

  2. B

    Rs. 9,24,000 (forgone salary plus forgone interest).

  3. C

    Rs. 3,00,000 (the cash withdrawn).

  4. D

    Rs. 12,00,000 (salary plus the full deposit).

20 more questions in this paper

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More on the Principles of Economics Quiz 1 Undated paper

The IIT Madras BS Principles of Economics (Principles of Economics) Quiz 1 paper sat on Undated, in the Undated: 23 questions for 25 marks in 120 minutes. The first 3 questions are below. Sign in with Google — it is free — to see the whole paper with its answers and explanations, in learning mode or as a timed mock test.

FeaturePrinciples of Economics Quiz 1 Undated at a glance
TermUndated
SubjectPrinciples of Economics
Questions23
Marks25
Duration120 min
MCQ23
Negative markingNo negative marking.
Updated

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