"An objective of firms is to maximize profits". This statement:
a) has been proven by empirical testing to be always true.
b) is a normative statement and thus cannot be tested.
c) is an unrealistic assumption, and therefore of little use to economists
d) is an assumption used by economists to predict the behaviour of firms.
e) applies only to corporations
Ans: d) is an assumption used by economists to predict the behaviour of firms.
You might also like to view...
The above figure shows the apartment rental market in Bigtown. If the Bigtown Housing Authority imposes a rent ceiling of $500 per apartment, the deadweight loss will be
A) $1,000,000. B) $500,000. C) $250,000. D) $125,000.
How do public goods differ from private goods?
What will be an ideal response?
The "Applied Perspective" titled "Cross Elasticity in the Salmon Industry" suggests that the cross elasticity of demand between farm-raised salmon and wild salmon is
a. positive and fairly large so the two types of fish are close substitutes consumers b. positive but close to zero so the two types of fish are in different markets c. negative because consumers like to serve both types as complementary goods d. high so that a price decrease leads to a total revenue increase e. low so that a price decrease leads to a total revenue decrease
Suppose you have been hired as a management consultant by a major oil company to help it optimally price gasoline at its service stations. Your client would like your team to perform a study on? customers' gasoline purchasing habits when they notice price increases. You suggest that the team? _____________.
A. collect competitor data. Your answer is not correct. B. develop a model that allows for scenario analysis. C. design and execute an experiment. D. utilize artificial intelligence to model human behavior.