17/10/2020 Quiz 1 - Managerial Economics - Section I

Quiz 1 - Managerial Economics - Section I

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All questions are based on Figure 1

Question 1

Figure 1

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17/10/2020 Quiz 1 - Managerial Economics - Section I

5. Refer to Figure 1, what is the equilbirum price and quantity? * 2 points

Mark only one oval.

25 and 600

35 and 400

25 and 400

35 and 600

6. Refer to Figure 1, at a price of 15 there is a: * 1 point

Mark only one oval.

Shortage

Surplus

7. Refer to Figure 1, at what price will there be surplus of 400 units? * 1 point

Mark only one oval.

20

30

15

35

8. Refer to Figure 1, at what price will there be shortage of 400 units? * 1 point

Mark only one oval.

20

30

15

35

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17/10/2020 Quiz 1 - Managerial Economics - Section I

9. Refer to Figure 1, Suppose instead that the demand curve is now a vertical 1 point
line at 600 units. New equilibrium price is *

Mark only one oval.

15

20

25

30

35

10. Suppose that now demand is as usual but instead of what you see in the 1 point
figure, the supply curve is a horizontal line passing through the price of Rs
20. New equilibrium quantity is *

Mark only one oval.

200

300

400

500

600

Question 2

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17/10/2020 Quiz 1 - Managerial Economics - Section I

11. Sanjay has to make a choice between 26 consumption bundles and is a 2 points
rational consumer (for whom the assumptions of preferences hold good).
Each bundle is represented by a letter of the English alphabet. When I
asked him about his preferences, he said that he can rank his preferences
for vowel bundles in the reverse of the order they appear in the alphabet
(ie, for A, E, I, O and U his most preferred is U and least preferred is A). He
also said that he strictly prefers bundle A over bundle D, and D over C and
C over B. After hearing this, I offered him just two bundles, E and C.
Which one did he choose? *

Mark only one oval.

Not enough information to answer

Question 3

For each of the following statements, mention which of the assumptions of

preferences are violated, if any?

12. Given a choice between chocolate vanilla, I always prefer to have vanilla 1 point
and never prefer chocolate. *

Mark only one oval.

Completeness

Transitivity

Monotonicity

Convexity

None

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17/10/2020 Quiz 1 - Managerial Economics - Section I

13. 4 slices of pizza makes me less happy than 3 slices of pizza * 1 point

Mark only one oval.

Completeness

Transitivity

Monotnicity

Convexity

None

14. I like movies and dining out but I cannot decide whether I would prefer to 1 point
watch the movie, Gulabo Sitabo or order food on Swiggy from Tunday
Kababi *

Mark only one oval.

Completeness

Transitivity

Monotonicity

Convexity

None

15. I will not pay you for a pair of shoes I will buy from you * 1 point

Mark only one oval.

Completeness

Transitivity

Monotonicity

Convexity

None

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17/10/2020 Quiz 1 - Managerial Economics - Section I

16. I like vanilla and strawberry ice-cream equally but I surely hate the two-in- 1 point

one flavour (which is a mix of vanilla and strawberry) in comparison to

these *

Mark only one oval.

Completeness

Transitivity

Monotonicity

Convexity

17. I like oranges more than apples and I like apples more than grapes but 1 point
when my Mom offers me oranges and grapes, I would surely like to have
the oranges *

Mark only one oval.

Completeness

Monotonicity

Transitivity

Convexity

None

18. I love the movie-hall combo of popcorn and soft drink but I always like the 1 point
large bucket of popcorn and small drink more than the large bucket and
large drink *

Mark only one oval.

Completeness

Monotonicity

Transitivity

Convexity

None

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17/10/2020 Quiz 1 - Managerial Economics - Section I

19. I love eating more and more biscuits but I do not like the 4th biscuit as 1 point
much as I love the 3rd biscuit *

Mark only one oval.

Completeness

Transitivity

Monotonicity

Convexity

None

More on Demand, Supply and Preferences

Question 4

20. From 1970 to 2010, the real price of a college education increased, and 2 points
total enrollment increased. Which of the following could have caused this
increase in price and enrollment? *

Mark only one oval.

A shift to the right in the supply curve for college education and a shift to the left in
the demand curve for college education.

A shift to the left in the supply curve for college education and a shift to the right in
the demand curve for college education.

A shift to the left in the supply curve for college education and a shift to the left in
the demand curve for college education.

None of the Above

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17/10/2020 Quiz 1 - Managerial Economics - Section I

21. From 1970 to 2010, the real price of eggs decreased and the total annual 2 points
consumption of eggs decreased. Which of the following would cause an
unambiguous decrease in the real price of eggs and an unambiguous
decrease in the quantity of eggs consumed? *

Mark only one oval.

A shift to the right in the supply curve for eggs and a shift to the right in the
demand curve for eggs.

A shift to the left in the supply curve for eggs and a shift to the right in the demand
curve for eggs.

A shift to the left in the supply curve for eggs and a shift to the left in the demand
curve for eggs.

None of the Above

22. We observe that both the price of and quantity sold of golf balls are rising 2 points

over time. This is due to: *

Mark only one oval.

continual improvements in the technology used to produce golf balls.

increases in the price of golf clubs over time.

decreases in membership fees for country clubs with golf facilities.

more stringent professional requirements on the quality of golf balls requiring

producers to use more expensive raw materials.

23. Consider the following three market baskets: A (15 mangoes, 18 2 points
pineapples), B (25 mangoes, 16 pineapples) and C (20 mangoes, 17
pineapples). All assumptions of preferences hold and A and B are on the
same indifference curve. This must mean: *

Mark only one oval.

A and B are both preferred to C.

C is preferred to both A and B.

C is on the same indifference curve as A and B.

There is not enough information to determine preferences for C relative to the other
goods.

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17/10/2020 Quiz 1 - Managerial Economics - Section I

Budget Constraints all over the place!!

Question 5

24. If prices and income in a two-good society are halved, what will happen 2 points
to the budget line? *

Mark only one oval.

The intercepts of the budget line will increase.

The intercepts of the budget line will decrease.

The slope of the budget line will increase

The slope of the budget line will decrease

Not enough information provided to determine an answer

Budget line remains unchanged

25. Assume that food is measured on the horizontal axis and clothing on the 1 point

vertical axis. If the price of food falls relative to that of clothing, the
budget line will: *

Mark only one oval.

become flatter.

become steeper.

shift outward.

become steeper or flatter depending on the relationship between prices and

income.

26. The price of coffee is always equal to one-half the price of tea. When we 2 points
plot the budget line for coffee and tea, coffee is plotted on the horizontal
axis. What is the slope of this budget line? *

Mark only one oval.

-0.5

0.5

-2

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17/10/2020 Quiz 1 - Managerial Economics - Section I

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