PGP_II_Microeconomics for Managers_Quiz_23 Sep-2020

Luikang Test Taken on: September 23, 2020 05:45:40 PM +05:30

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Credibility Index: HIGH

Registration Details

Email p20luikangr@iimidr.ac.in First Name: Luikang

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Roll Number: 2020PGP223

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Overall Summary

MARKS SCORED

Score Percentile Percentage

Section #1 32 / 100 29 32

Total 32 / 100 29 32

Percentile is among 622 candidate(s) who've taken this test.

 SUMMARY OF ATTEMPTS TIME TAKEN

4 Not Attempted 0 40
(Scored 0/20)
hr min
8 Correct
(Scored 40/40)
Available time: 0 hr 40 min

TOTAL QUESTIONS
8 Incorrect
(Scored -8/40)

20
 Section-wise Details

Section #1

MARKS SCORED

Score Percentage

ME Quiz 23 Sep 32 / 100 32

Total 32 / 100 32

SUMMARY OF ATTEMPTS TIME TAKEN

4 Not Attempted 0 40
(Scored 0/20) hr min
8 Correct
(Scored 40/40)
This was untimed section.

TOTAL QUESTIONS
8 Incorrect
(Scored -8/40)

20
 Question-wise Details

Section #1

Question 1: NOT ATTEMPTED

Which of the following describes a correct relation between price elasticity of demand and a monopolist’s marginal revenue
when inverse demand is linear, P = a- bQ ?
 Options Response Answer

Demand is elastic when Q < a/2b.

Demand is inelastic when Q > a/b.

Demand is elastic when Q > a/2b.

Demand is unit elastic when P = a/2b.

Question 2: Time: 15 Min 18 Sec Marks: 5/ 5

Suppose that a market is initially in equilibrium. The initial demand curve is P=90-Q
d. The initial supply curve is P=2Q
s. Suppose that the government imposes a Rs. 3 tax on this market. What is the change in consumer surplus due to the tax?
 Options Response Answer

Rs. 420.50

Rs. 450

Rs.0.50

Rs. 29.50

Question 3: Time: 1 Min 49 Sec Marks: -1/ 5

For national security reasons a government decides that all of its base metal industry should not be located in the same
geographical region, as it presently is. The government decides to allocate production quotas to firms in different parts of the
country, but does not restrict in any way the transactions between consumers and base metal producers. This scheme is
 Options Response Answer

efficient as consumers still buy from

whoever they like.

likely to be inefficient as some of the

industry's output is not produced by the
firms with the lowest cost.

likely to be inefficient as the scheme

will require subsidies to work.

efficient as those consumers who

value base metals the most can
purchase them.

Question 4: NOT ATTEMPTED

A monopolist faces inverse demand P = 400 – 4Q and has constant marginal cost MC = 80. If this monopolist engages in first-
degree price discrimination, total output and producer surplus will equal to____, ______ respectively:
 Options Response Answer

60 units and 3200

80 units and 12800

20 units and 1600

40 units and zero

Question 5: Time: 2 Min 34 Sec Marks: -1/ 5

Which of the following is not true of monopolists?

 Options Response Answer

Monopolists can charge any price they

want and make a profit.

The entry of new firms is not a major

concern.

Monopolists can choose any point on

the market demand curve.

Monopolists can raise price more than

percent equivalent of degree of price
elasticity.

Question 6: Time: 3 Min 24 Sec Marks: 5/ 5

A monopolist faces the inverse demand function described by p=32-5q where q is output. The monopolist has no fixed cost and
his marginal cost is 7 at all levels of output. Which of the following expresses the monopolist's profits as a function of his output?:
 Options Response Answer

32q-5q
2-7.

32-5q-7.

32-12q.

25q-5q
2.

Question 7: Time: 3 Min 18 Sec Marks: -1/ 5

 India has the following domestic supply and demand for cricket bats: P
d = 20-2Q
d,

P
s=5+Q

s. The world price for cricket bat is 7 dollars. Now, suppose the government decided to impose 1$ tariff on foreign bat makers.
The new equilibrium number of bats produced domestically and imported are
 Options Response Answer

2 and 6 respectively.

3 and 3 respectively.

3 and 6 respectively.

5 and 0 respectively.

Question 8: Time: 5 Min 2 Sec Marks: -1/ 5

 Suppose that the market for corn in USA is initially in equilibrium and is perfectly competitive. The demand curve can be
expressed as P=10-Q
d; the supply curve can be expressed as P=0.25Q
s. Quantity is expressed in millions of bushels. Now suppose that the U.S. government imposes a price floor of 3 U.S. dollar per
bushel of corn. What is the dead-weight loss (per million bushels) associated with the price floor when the least efficient
producers are active?

Options Response Answer

$0.63.

$1.

$2.25.

$9.375.
Question 9: Time: 48 Sec Marks: -1/ 5

For a perfect first-degree price discriminator, incremental revenue is

Options Response Answer

the same as the marginal revenue

curve if the firm is a non-discriminating
monopolist.

greater than price if the demand curve

is downward sloping

less than the marginal revenue for a

non-discriminating monopolist.

equal to the price paid for each unit of

output.

Question 10: Time: 1 Min 4 Sec Marks: 5/ 5

The cartel of oil-producing nations (OPEC) once controlled about 80% of the world petroleum market, but OPEC's market share
has declined to about half of its former level. This outcome is a good example of how firms may have:
 Options Response Answer

relatively high short-run monopoly

power that strengthens in the long run.

relatively low short-run monopoly

power that strengthens in the long run.

relatively low short-run monopoly

power that declines in the long run.

relatively high short-run monopoly

power that declines in the long run.

Question 11: Time: 23 Sec Marks: -1/ 5

A monopolist faces linear inverse demand P = a – bQ and constant marginal cost, c. The term a increases by amount Δa. By
how much does the monopolist’s optimal price increase?
 Options Response Answer

Δa - c.

Δa/2.

Δa/b.

Δa.

Question 12: Time: 31 Sec Marks: 5/ 5

Suppose that the market for cigarettes is initially in equilibrium and is perfectly competitive. The demand curve can be
expressed as P=60-Q
d; the supply curve can be expressed as P=0.5Q
s. Quantity is expressed in millions of boxes per month. Now suppose that the government imposes a production quota on
cigarettes of 30 million boxes per month. What is the dead-weight loss (per million boxes) associated with the quota?
 Options Response Answer

Rs. 75.

Rs. 25.

Rs. 275.

Rs. 50.

Question 13: Time: 32 Sec Marks: 5/ 5

The burden of a tax per unit of output will fall heavily on consumers when demand is relatively __________ and supply is
relatively __________.
 Options Response Answer

elastic; inelastic.

elastic; elastic.

inelastic; inelastic.

inelastic; elastic.

Question 14: Time: 51 Sec Marks: -1/ 5

An increase in demand for a monopolist will cause the

 Options Response Answer

profit-maximizing price to increase

when marginal cost decreases as
quantity increases

profit-maximizing price to decrease

when marginal cost increases as
quantity increases

profit-maximizing price to decrease

when marginal cost decreases as
quantity increases

profit-maximizing price to stay constant

regardless of the shape of the marginal
cost curve

Question 15: Time: 21 Sec Marks: 5/ 5

Price ceilings can result in a net loss in consumer surplus when the __________ curve is __________.
 Options Response Answer

demand; very inelastic.

none of the above; price ceilings

always increase consumer surplus.

supply; very inelastic.

demand; very elastic.

Question 16: Time: 30 Sec Marks: -1/ 5

Under a binding price ceiling, what does the change in producer surplus represent?
 Options Response Answer

The gain in surplus associated with the

excess demand created by the price
ceiling policy.

Both A and B are correct.

The loss in surplus associated with

those units that used to be produced at
the higher price but are no longer
produced at the lower price.

The gain in surplus for those sellers

who are still willing to supply the product
at the lower price.

Question 17: Time: 15 Sec Marks: 5/ 5

Consider a perfectly competitive market with inverse market supply P=5+3Qs and inverse market demand P=50-2Qd. Suppose
the government subsidizes this market with a subsidy of Rs.5 per unit. What is the deadweight loss resulting from the subsidy?
 Options Response Answer

2.5

7.5

Question 18: Time: 14 Sec Marks: 5/ 5

Although rice is a staple of the Japanese diet, the Japanese government has long restricted the importation of rice into Japan.
The result of this import quota is:
 Options Response Answer

to decrease the price of rice to the

Japanese people

to decrease the consumer surplus of

Japanese rice consumers.

to increase the consumption of rice by

the Japanese people.

to decrease the producer surplus of

Japanese rice producers.

Question 19: NOT ATTEMPTED

An airline has exclusive landing rights at the New Delhi airport. The airline flies one flight per day to New Delhi with a plane that
has a seating capacity of 100. The cost of flying the plane per day is 4,000 +10Q where Q is the number of passengers. The
number of passengers flying to New Delhi in this flight depend upon the price, based on the demand function: Q = 165 - 0.5P. If
the airline maximizes its monopoly profits, the difference between the marginal cost of flying an extra passenger and the amount
the marginal passenger is willing to pay to fly to New Delhi is:
 Options Response Answer

160

10

None of the above

140

Question 20: NOT ATTEMPTED

Which of the following statements regarding a monopoly's first-degree price discrimination is correct?
Options Response Answer

With first-degree price discrimination,

total surplus is greater than when the
monopoly charges a uniform price.

With first-degree price discrimination,

consumer surplus is small, yet still
greater than zero

With first-degree price discrimination,

deadweight loss is large.

With first-degree price discrimination,

producer surplus is lower than with
uniform pricing.

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23 Sep,2020
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