An apple farmer must decide how many apples to harvest for the world apple market. He knows that there is a one-third probability that the world price will be $1, a one-third probability that it will be $1.50, and a one-third probability that it will be $2. His cost function is C(Q) = .01Q2. If the farmer is risk neutral:
A. he strictly prefers producing the expected profit-maximizing quantity to producing nothing.
B. he strictly prefers to produce.
C. he is indifferent between producing the expected profit-maximizing quantity and producing nothing.
D. he should produce at a quantity in between zero and the expected profit-maximizing quantity.
Answer: B
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Refer to Figure 11-18. A curve that connects points A, D, and E is called
A) a total cost line. B) an expansion path. C) an indifference line. D) an input-output curve.
Which of the following would be most likely to encourage capital formation in a less-developed country?
a. The expectation of sustained high inflation. b. The expectation that property rights will be highly secure in the years ahead. c. The imposition of high tariffs and other restraints limiting imports. d. Higher personal and corporate tax rates.
A corrective tax places a price on the right to pollute
a. True b. False Indicate whether the statement is true or false
The choice between increasing government spending and cutting taxes often is related to
A) what an economist believes the value of both the tax multiplier and the government spending multiplier are. B) what an economist believes the right size and scope of government might be. C) whether an economist believes that government spending leads to complete crowding out. D) a and b E) all of the above