A Goatherd Has the Cost Function C(y)= 4y2, Where Y

question 17

Multiple Choice

A goatherd has the cost function c(y) = 4y2, where y is the number of tubs of goat cheese she makes per month.She faces a competitive market for goat cheese,with a price of $40 a tub.How many tubs should she produce per month?

• A)The square root of 40
• B)16
• C)5
• D)The square root of 10
• E)2.50

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Definitions:

Quasilinear Preferences

Preferences represented by utility functions where the marginal utility of consumption is constant irrespective of other goods consumed.

Indifference Curves

Graphical representations of different combinations of goods or services among which a consumer is indifferent, showing no preference for one combination over another.

Perfect Substitutes

Products or services that can be used in exactly the same way by the consumer and that are perceived as identical in satisfying an individual's needs or desires.

Perfect Complements

Goods that are consumed together in fixed proportions to fulfill a specific utility.