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Managerial Economics · Quiz 2 · 3 Aug 2025 (Afternoon)

BSMS3206 · 31 questions · 25 marks · 60 min

Answer key Take as mock

Indian Institute of Technology Madras

BS Degree Programme · Examination & Study Paper

BSMS3206 · Managerial Economics

Quiz 2 · 3 Aug 2025 (Afternoon)

Official Paper

Examination Instructions & Guidelines

Solve on notebook/paper first before checking solutions.
MCQ: Exactly 1 option is correct. Negative marking applies.
NAT: Numerical response. No negative marking.
Scientific calculator allowed for all calculations.
Official answer key is sealed at the end of this sheet.

Read the passage below, then answer Q1–Q2
Based on the above data, answer the given subquestions.
Q1NAT1 Mark·Write the number
Key ↓
Suppose that both Air India and Indigo charge a price of $300 each for a round-trip ticket between Kolkata and Delhi. What is the price elasticity of demand for Indigo flights between Kolkata and Delhi? (please ignore the sign)
Your answer:
Q2NAT1 Mark·Write the number
Key ↓
What is the market-level price elasticity of demand for air travel between Kolkata and Delhi when both airlines charge a price of $300? (please ignore the sign)
Your answer:
Read the passage below, then answer Q3–Q4
Based on the above data, answer the given subquestions.
Q3MCQ1 Mark·Choose one option
Key ↓
How many nurses will the hospital hire as a monopsonist
1. A100
2. B120
3. C140
4. D160
Q4MCQ1 Mark·Choose one option
Key ↓
What wage will it pay to a nurse
1. A12500
2. B13000
3. C14000
4. D16000
Read the passage below, then answer Q5–Q6
Consider the following game matrix where only the payoff of player 1 is given.
Based on the above data, answer the given subquestions.
Q5MCQ0.5 Marks·Choose one option
Key ↓
M weakly dominates T
1. ATrue
2. BFalse
Q6MCQ0.5 Marks·Choose one option
Key ↓
M weakly dominates B
1. ATrue
2. BFalse
Read the passage below, then answer Q7–Q9
A monopolist can produce at a constant average (and marginal) cost of AC = MC = $5. It faces a market demand curve given by Q = 53 – P.
Based on the above data, answer the given subquestions.
Q7NAT1 Mark·Write the number
Asked 2 times Key ↓
Calculate the profit-maximizing price (in $) for this monopolist.
Your answer:
Q8NAT1 Mark·Write the number
Asked 2 times Key ↓
Calculate the profit-maximizing quantity for this monopolist.
Your answer:
Q9NAT1 Mark·Write the number
Asked 2 times Key ↓
What will be the profit of this monopolist? Profit= ___________________
Your answer:
Read the passage below, then answer Q10–Q12
Suppose that a competitive firm’s marginal cost of producing output q is given by MC(q)=6+4q. Assume that the market price of the firm’s product is ₹18.
Based on the above data, answer the given subquestions.
Q10MCQ1 Mark·Choose one option
Key ↓
What level of output (q) the firm will produce?
1. A2
2. B3
3. C4
4. D5
Q11MCQ1 Mark·Choose one option
Key ↓
Producer surplus of the firm is
1. A17
2. B18
3. C19
4. D20
Q12MCQ1 Mark·Choose one option
Key ↓
Suppose the average variable cost of the firm is given by AVC(q)=3+q and firm’s fixed costs are known to be ₹3, the firm be earning
1. APositive economic profit
2. BNegative economic profit
3. CZero economic profit
4. DCannot say
Read the passage below, then answer Q13–Q21
Based on the above data, answer the given subquestions.
Q13NAT1 Mark·Write the number
Asked 3 times Key ↓
Your answer:
Q14NAT1 Mark·Write the number
Asked 3 times Key ↓
Your answer:
Q15NAT1 Mark·Write the number
Asked 2 times Key ↓
New equilibrium quantity after the incidence of tax Q^t = __________________
Your answer:
Q16NAT1 Mark·Write the number
Asked 2 times Key ↓
Price that buyers pay now will be P^B= ________________
Your answer:
Q17NAT1 Mark·Write the number
Asked 2 times Key ↓
Price that seller receives per unit will be P^S= _______________
Your answer:
Q18NAT1 Mark·Write the number
Key ↓
Suppose, the government acts weird and removes the tax to provide a subsidy of ₹2 per unit to cigarette producers. New equilibrium quantity after the subsidy, Q^S = __________
Your answer:
Q19NAT1 Mark·Write the number
Key ↓
Suppose, the government acts weird and removes the tax to provide a subsidy of ₹2 per unit to cigarette producers. Price that buyers pay now will be P^B= ______________
Your answer:
Q20NAT1 Mark·Write the number
Key ↓
Suppose, the government acts weird and removes the tax to provide a subsidy of ₹2 per unit to cigarette producers. Price that seller receives per unit (including subsidy) will be P^S= _____________
Your answer:
Q21NAT1 Mark·Write the number
Key ↓
Suppose, the government acts weird and removes the tax to provide a subsidy of ₹2 per unit to cigarette producers. Total cost to the government will be (in rupees) ______________
Your answer:
Q22MCQ0.5 Marks·Choose one option
Key ↓
In quasi-linear utility functions, the marginal utility of income remains constant
1. ATrue
2. BFalse
Q23MCQ0.5 Marks·Choose one option
Key ↓
A monotonic transformation can alter the shape of indifference curves
1. ATrue
2. BFalse
Q24MCQ0.5 Marks·Choose one option
Key ↓
Marginal utility is unaffected by monotonic transformations
1. ATrue
2. BFalse
Q25MCQ0.5 Marks·Choose one option
Asked 3 times Key ↓
The entire burden of a quantity tax falls on buyers when the price elasticity of supply is zero.
1. ATrue
2. BFalse
Q26MCQ0.5 Marks·Choose one option
Asked 3 times Key ↓
If demand is perfectly inelastic, consumers bear the full incidence of a per-unit tax.
1. ATrue
2. BFalse
Q27MCQ0.5 Marks·Choose one option
Key ↓
For a profit-maximizing monopolist, price exceeds marginal revenue at the equilibrium quantity.
1. ATrue
2. BFalse
Q28MCQ0.5 Marks·Choose one option
Asked 2 times Key ↓
When a monopolist practices perfect price discrimination, it eliminates only some portion of the deadweight loss.
1. ATrue
2. BFalse
Q29MCQ0.5 Marks·Choose one option
Key ↓
A natural monopoly has a long-run marginal cost that exceeds long-run average cost.
1. ATrue
2. BFalse
Q30MCQ0.5 Marks·Choose one option
Key ↓
Peak load pricing is a form of price discrimination.
1. ATrue
2. BFalse
Q31MCQ0.5 Marks·Choose one option
Asked 3 times Key ↓
A monopolist will never operate in the elastic portion of the demand curve.
1. ATrue
2. BFalse

Official Key

Master Answer Key & Explanations

Official answer keys from IIT Madras BS past papers. Click any question to review.

Reveal Key

Q12.9 to 3.1

Q20.029 to 0.031

Q3A

Q4B

Q5A

Q6B

Q729

Q824

Q9576

Q10B

Q11B

Q12A

Q137 or 7000

Q143

Q156 or 6000

Q164

Q172

Q188 or 8000

Q192

Q204

Q2116000

Q22A

Q23B

Q24B

Q25B

Q26A

Q27A

Q28B

Q29B

Q30A

Q31B

Detailed Answer Notes & Working

Q13Answer: 7 or 7000: Official answer key accepts 7 or 7000.
Q15Answer: 6 or 6000: Official answer key accepts 6 or 6000.
Q18Answer: 8 or 8000: Official answer key accepts 8 or 8000.

Questions and answer keys are reproduced from the official IIT Madras BS papers. BTechi is not affiliated with IIT Madras.