Suppose the utility function for a firm manager is U = ? + bQ, where Q is output, ? is profit, and b is a positive constant. How would the firm's output compare with what it would be if the manager's objective was to maximize profit?
A. It would be less than the profit-maximizing output.
B. It would be greater than the profit-maximizing output.
C. It would be the same as the profit-maximizing output.
D. None of the statements is correct.
Answer: B
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What are the key factors that determine the profitability of a firm in a monopolistically competitive market?
What will be an ideal response?
Which of the following would be LEAST likely to contribute to a moral hazard problem among drivers?
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A firm will not choose to produce if total variable costs exceed total revenue.
Answer the following statement true (T) or false (F)