Managerial Economics
Quiz 1
Marks: 25
Time: 30 minutes
1. Draw the following diagram:
Given the supply of a commodity, the less sensitive the quantity demanded is to price (i.e.
the steeper the demand curve), the greater is the share of the tax paid by the consumers in
the form of higher prices. (5 marks)
2. Draw the following diagram:
Given the demand for a commodity, the less sensitive the quantity supplied is to price (i.e.
the steeper the supply curve), the smaller is the share of the tax paid by the consumers and
the larger is the share paid by the sellers. (5 marks)
3. QD = 18-4P
QS = 2+4P
Requirements:
a. Solve the equation for equilibrium price and quantity. (2 marks)
b. Draw the graph and mark the equilibrium point, price and quantity. (2 marks)
c. Show the impact of price ceiling and floor. (3 marks)
4. Indicate what happens (immediate reaction only) in the rice market (also show in
diagram) ifa. Cyclone Amphan hits the southern part of Bangladesh (2marks)
b. Government sells open market rice at a cheaper price (2 marks)
c. BIRI comes up with a hybrid seed of rice (2 marks)
d. Government decides to import rice from India (2 marks)