Suppose the Utility Function for a Firm Manager Is U $\pi$

question 26

Multiple Choice

Suppose the utility function for a firm manager is U = $\pi$ + bQ, where Q is output, $\pi$ is profit, and b is a positive constant.How would the firm's output compare with what it would be if the manager's objective was to maximize profit?

• A)It would be greater than the profit-maximizing output.
• B)It would be less than the profit-maximizing output.
• C)It would be the same as the profit-maximizing output.
• D)None of the statements associated with this question are correct.

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