1. Suppose a person likes both rap music (R) and country music (C) with a set preference so that U = C^1/2 R^1/2. Which point (C, R) makes this person the happiest?

a. 4, 16

b. 25, 1

c. 9, 9

d. 16,4

2. If Q = K^1/3 L², the MP_Kis

a. constant

b. diminishing

c. increasing

d. none of the above answers are correct

e. option 5

3. Suppose a production function is q = K^1/2 L^1/3 and in the short-run capital (K) is fixed at 100. If the wage is $10 and the rental rate on capital is $20, the fixed cost is

a. $2,000

b. $200

c. $20,000

d. $0

4. A monopolist has total cost TC = Q² + 10Q+100 and marginal cost MC = 2Q+10. It faces demand Q = 130-P (so its marginal revenue is MR = 130-2Q). Its profit maximizing output

a. 30

b. 25

c. 20

d. 10

5. In the long run, in the model of monopolistic competition, for a typical firm, price is

a. above average cost but equal to marginal cost.

b. above marginal cost but equal to average cost.

c. above marginal cost.

d. equal to marginal cost and equal to or greater than average cost.

6. In the case of a negative externality, the social marginal cost will

a. exceed the private marginal cost.

b. be equal to private marginal cost.

c. fall short of private marginal cost.

d. bear no significant relation to private marginal cost.