indian Institute of Management, Rohtak Mid Term Examination Cerne: 2021) a uiness Deck pa ‘Time: 2 Hours Full Marks: 100 Instructions: a. Thisis a closed book exam b. This question paper contains two pages only ¢. Use of cell phone is strictly prohibited. d. Only Non-Programmable calculator can be used fe — Answerall questions f. Marks are indicated in the right hand parenthesis against each question, g Please write the answers in plain A4 papers, scan it and submit to the office as instructed. The sheet should have student names, roll no, section and the subject name. Any kind of plagiarism will be strictly penalised. Question 1: Consider the following general supply func for good Z: Qc= 60 + 80P-70P; +8T-SOPx—42P. +7N Where, Q. is the quantity supplied, P is the price of good Z, P1 is the price of key input in the production process, T is the level of technology, Pr. is the price of related good R, Peis the expectations about future price of Z and N is the number of firms in the industry. (All parameter ‘estimates are statistically significant atthe | percent level). a) Explain and interpret the intercept and slope parameters on P, P.,T, Pe and N. b) Is the good related in production a complement or substitute in production? Interpret and Exp! ©) AtPr12, T=6, Pe=3, Pe=5 and N=40 estimate the inverse supply function and plot it. Using the inverse supply function, estimate the supply price for $00 units of the commodity and give interpretation ofthis supply price. 10*3=30 Question 2: The Sula Wine Association in Nashik estimated the current demand and Pe Gains for the Sula wine as below: | Qu=20-0.07P Q=-5+030P Supply respectively of Sula wine, and rket clearing price and quantin miment imposes a ceiling price Scanned with CamScannerQuestion b, The attendance for Shilpa Shetty starer Hungama 2 at RK Cinemas in Rohtak dropped by 18 percent as prices of Hungama’s ticket rose a litle more than 8 percent. What is the price Elasticity of demand for Hungama’s ticket? [sit elastic, inelastic or unitary elastic? Is it possible that itis overestimated? Explain the concept of price elasticity of demand and highlight how itis different from the slope of the demand function? Use graphs for your answer (15 marks} Total [25 marks] his question consists of two parts a and b. You are required to answer both the pars, Ranbir's utility function is given as U(x, y) = xy where x represents hotdogs and y represents hamburgers. He has income I = Rs 200 and faces prices Py = Rs 25 and P, = Rs 5. Determine the optimal basket of Ranbir given these prices and his income. Explain? Alia has a utility function given as U = x'y where x represents hotdogs and y represents hamburgers. The price of x is 5, the price of y is P,, and her income is 49. When she maximizes utility subject to her budget constraint, she purchases 5 units of y. What must be the price of y and the amount of x consumed? [7.5x2=15] Scanned with CamScanner