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) = 0.01Q2. The farmer's maximum expected profit is:
A. $0.
B. ?$7.75.
C. $7.75.
D. None of the answers are correct.
Answer: D
You might also like to view...
Price elasticity of supply is defined as:
a. the slope of the supply curve. b. the slope of the supply curve divided by the price. c. the percentage change in price divided by the percentage change in quantity supplied. d. the percentage change in quantity supplied divided by the percentage change in price.
The formula for price elasticity of demand that is used in practice
a. usually drops all minus signs. b. usually takes on different values at different points on the demand curve. c. may calculate the percentage change in price between P1 and P2 as "(P2 ? P1) as a percentage of (P1 + P2)/2." d. All of the above are correct.
Other things the same, a decrease in the price level motivates people to hold
a. less money, so they lend less, and the interest rate rises. b. less money, so they lend more, and the interest rate falls. c. more money, so they lend more, and the interest rate rises. d. more money, so they lend less, and the interest rate falls.
A theory of taxation that states that ________ is the ability-to-pay principle.
A. taxpayers should contribute to the government in proportion to the benefits they receive from public expenditures B. taxpayers should contribute to the government in a smaller proportion than the benefits they receive from public expenditures C. taxpayers should contribute to the government in a greater proportion than the benefits they receive from public expenditures D. citizens should bear tax burdens in line with their ability to pay taxes