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Managerial Economics End Term: 13 April 2025 (January 2025 term)

Question 1

+2 marksOne correct option

There are 50 low-risk people in a town and 50 high-risk people. A low-risk person has an average of $500 in medical expenses each year and is willing to pay $800 for medical insurance (this person is risk averse). A high-risk person has an average of $1,200 in medical expenses each year and is willing to pay $1,500 for medical insurance. Insurance companies are unable to differentiate who is high-risk and who is low risk.
Based on the above data, answer the given subquestions.

If the insurance provider offered medical insurance at a price of $1,000

  1. A

    Everyone will enroll for the insurance irrespective of the type

  2. B

    The provider will lose money

  3. C

    Both everyone will enroll for the insurance irrespective of the type & the provider will lose money

  4. D

    None

Question 2

+2 marksOne correct option

There are 50 low-risk people in a town and 50 high-risk people. A low-risk person has an average of $500 in medical expenses each year and is willing to pay $800 for medical insurance (this person is risk averse). A high-risk person has an average of $1,200 in medical expenses each year and is willing to pay $1,500 for medical insurance. Insurance companies are unable to differentiate who is high-risk and who is low risk.
Based on the above data, answer the given subquestions.

If the insurance company offered medical insurance at a price of $1,300

  1. A

    low-risk people would not be insured

  2. B

    Total surplus will be $10000 if the price is $1300

  3. C

    Both low-risk people would not be insured & total surplus will be $10000 if the price is $1300

  4. D

    None

Question 3

+2 marksNumerical answer

A beekeeper lives adjacent to an apple orchard. The orchard owner benefits from the bees because each hive pollinates about one acre of apple trees. The orchard owner pays nothing for this service, however, because the bees come to the orchard without him having to do anything. Because there are not enough bees to pollinate the entire orchard, the orchard owner must complete the pollination by artificial means, at a cost of $10 per acre of trees.
Beekeeping has a marginal cost MC = 10 + 5Q, where Q is the number of beehives. Each hive yields $40 worth of honey.
Based on the above data, answer the given subquestions.

What should be the socially efficient number of hives that the beekeeper should maintain _________

37 more questions in this paper

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More on the Managerial Economics End Term 13 Apr 2025 paper

The IIT Madras BS Managerial Economics (Managerial Economics) End Term paper sat on 13 Apr 2025, in the January 2025 term: 40 questions for 45 marks in 180 minutes. The first 3 questions are below. Sign in with Google — it is free — to see the whole paper with its answers and explanations, in learning mode or as a timed mock test.

FeatureManagerial Economics End Term 13 Apr 2025 at a glance
TermJanuary 2025 term
SubjectManagerial Economics
Course codeBSMS3033
Questions40
Marks45
Duration180 min
MCQ24
Numerical16
Official paperIIT M IMPROVEMENT AN EXAM QIM3 13 Apr 2025
Negative markingNo negative marking.
Updated

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