Indian Institute of Technology Madras
BS Degree Programme · Examination & Study Paper
BSMS3206 · Managerial Economics
Perfect competition
Official Paper
Examination Instructions & Guidelines
- Solve on notebook/paper first before checking solutions.
- MCQ: Exactly 1 option is correct. Negative marking applies.
- Scientific calculator allowed for all calculations.
- Official answer key is sealed at the end of this sheet.
Read the passage below, then answer Q1–Q3
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.
Q1MCQ1 Mark·Choose one optionWhat level of output (q) the firm will produce?
- A2
- B3
- C4
- D5
- Q2MCQ1 Mark·Choose one option
Producer surplus of the firm is
- A17
- B18
- C19
- D20
- Q3MCQ1 Mark·Choose one option
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
- APositive economic profit
- BNegative economic profit
- CZero economic profit
- DCannot say