Which of the Following May Be Consistent with Profit-Maximizing Behavior

question 7

Multiple Choice

Which of the following may be consistent with profit-maximizing behavior by a price-taking producer:

• A)Output is set where price is equal to marginal cost.
• B)Output is set where marginal revenue is equal to marginal cost.
• C)No output is produced.
• D)(a) and (b)
• E)(a) and C
• F)(b) and (c)
• G)All of the above
• H)None of the above

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Definitions:

Capital Asset Pricing Model

An approach outlining the connection between inherent risks and the expected return of assets, with a focus on stocks.

SML

The Security Market Line, a graphical representation used in the capital asset pricing model (CAPM) to show the relationship between the risk of an investment and its expected return.

Expected Return

The anticipated gain or loss on an investment, considering both the risk and return.

Expected Return

Expected return is the anticipated profit or loss from an investment, based on the potential outcomes and their probabilities, often used to evaluate investment choices.