Suppose Jason Owns a Small Pastry Shop

question 39

Multiple Choice

Suppose Jason owns a small pastry shop.Jason wants to maximize his profit, and thinking back to the microeconomics class he took in college, he decides he needs to produce a quantity of pastries which will minimize his average total cost.Will Jason's strategy necessarily maximize profits for his pastry shop?

• A)Yes; since Jason's pastry shop is in a perfectly competitive market, the only way to maximize profit is to produce the quantity where average total cost is minimized.
• B)Not necessarily; this strategy will only maximize Jason's profit in the long run, but not in the short run.
• C)No; in order to maximize profit, Jason would never want to produce the quantity where average total cost is minimized.
• D)Not necessarily; depending on demand, Jason may maximize profit by producing a quantity other than that where average total cost is at a minimum.

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Definitions:

Dependent Variable

In a study or experiment, this is the element that is predicted to alter due to modifications in the independent variable.

Regression Sum Of Squares

The portion of the total variance in a dependent variable that is explained by the regression model, indicating the model's explanatory power.

Coefficient Of Multiple Determination

A statistical measure that represents the proportion of the variance in the dependent variable that is predictable from the independent variables.

Multiple-regression ANOVA

A statistical technique that combines aspects of multiple linear regression analysis and analysis of variance (ANOVA) to understand the relationship between several independent variables and a dependent variable.