Indian Institute of Management

IPMX

Managerial Economics: Quiz 01

Term-I, 2023-24
Maximum Marks= 10 Total Duration = 15 Minutes

Marks Obtained Marks Obtained (ln Words): SEYEN ONLY

Instructions:
1. This is a closed-book quiz. This question paper cum answer booklet has two pages, including this
page. Please write your answers within the bordered area in the next page using ink only Please note
that no additional page will be supplied.
2 Do not write your answer on this page. You may, however, use the space marked for rough work.

NAME: RAJESH SHEUmED A :SECTION:

A
ROLL NO: |PMXIho34 DATE: 13/os 23

Space for Rough Work

Pz 200/k
clbe.

Comments of the Instructor

Signature of the Instructor:

Page 1 of 2
QUESTION MARKS =10=5
price of Tea is Rs.200/- per kilogram. Own price elasticity of demand
The current
If no other information is known other than for Tea
Rs. 200/- is estimated to be -0.98. a price increase of thaat
the
Tea by 1.0 per centprice
Coffee remains unchanged. would you advise to0 the
management? Would you advise a 1.0 per cent price increase of Tea if price of
increased by 1.0 per cent during the last week?

Pnteelastity o) demord for tea E,

nce RS. 200 /kg for Tea, say p, = 200 pe T
de = -ve >If pnce j tea
dp (6)
oeases, then onsumption wil Go down Since there is a
Substitude (offee whlhcan be corsuned vn place ay tea.
)Pice o offee ís urhonged
) pnce of toffee is uncharqed ,an incTea se n
pre oj tea mighttrigger a reduction in its consumpti
sinte consumers can take coffee
unstead (assumin
Coffee pnle (s compo rable/lauer than
it i_ not tea) cy it ls a
Substhitute . Hence, advisabe to
iNTeas e pnce
9 e0 by l'/e Suhte conSunes may suitch
a substitute itern whuse rentes to
denand will erentually iOCsease
) D4 price of offee in
seanes by l. then
due to nadure o)
substitution effe ct eOsumes natu olly
pseter to tonsune tea. In this
teo also were to be Scenario, it Pice
ncoeaDecd ,then it may have
anegatyve pod sune consume > Con Soltth
back to
trei prelererves p to thin King
Hente, it is not advisoble to incse ase Pn(ed subs titte

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 Indian Institute of
Management Lucknow
IPMX

ManagerialTerm-l,
Economics:
2023-24 Quiz 02
Maximum Marks =10
Total Duration = 15 Minutes
Marks Obtained
75 Marks Obtained (ln Words):
Instructions:
SEVEN PoiNT EvE ONL)
1
This is a closed-book quiz. This
question paper cum answer booklet has two
page. Please write your answers within pages,
using ink only including
that no additional page will be the bordered area in the next page this
2 Do not write your answer on this supplied. Please note
page. You may. however, use the space
marked for rough work.
NAME: RAJESH SHELOnEDA ; SECTION: A
ROLL No: IPMX l6039 DATE21|s]23

Space for Rough Work

Comments of the Instructor

Signature of the lnstructor:

Page 1 of 2
 QUESTION

Explain how the presence of economy of scope can

solve the problem of
MARKS =54
"break
individual demands for two products (say, A and B) are low in a region. even' when

Is it possible to have diminishing returns with respect to a single factor of production and constant
returns to scale at the same time? Discuss ith an example using a Cobb-Douglas production
function having two factors of production (say, capital K and labor L)!

Economies oj) scepe exploits the odvantages provided by yointly

pacduung goods whose combin ation makes economic sense
and benefits utucigh the (ost. Tn a scenario uhere twe
different fhs make tuo pyoducto that are cliffer ent in
nature the costs Can
be thougnt as c(u) ard c()
Instead O these two fioms, f
another fm combinc the se
pmoducts and monufatury the produets at a Cost Say
c* (Wz), Ahen Ecorsmies o) Sco
75 Et onomies o
is defirecd
AF¢
C()+C()-C(V2)
Scope c(1V2)
Break even io achieved at a aartity, V (Total Fxed (ost)
P-(Avg Vox (est)
So, ün cane ot
individual clemand o to producto A and B
beiy veny dow n a segion, by deve roong the dow
fixed ost pe unit Produced the fim can manufccture
lau aruanty ard stull appYoach break- even situ ations
he mix cf producto un the monutcttuyting set op (an
ensure thet the veduccd cesty ane devesaged to tho
beretit o the morufcctining fim. Experhse al p on
teams Can be put to se for ashoyt peiod sy tne Shce
thetx dle time iü Teducod.

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