An Apple Farmer Must Decide How Many Apples to Harvest

question 1

Multiple Choice

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) = .01Q².If the farmer is risk neutral:

• A) he strictly prefers producing the expected profit-maximizing quantity to producing nothing.
• B) he is indifferent between producing the expected profit-maximizing quantity and producing nothing.
• C) he should produce at a quantity in between zero and the expected profit-maximizing quantity.
• D) he strictly prefers to produce.

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Definitions:

Energy Intake

The total amount of energy from food and drink consumed and utilized by the body, measured in calories or joules.

Gain Weight

An increase in body weight through the accumulation of fat, muscle mass, or both, often resulting from an imbalance between calories consumed and burned.

Postabsorptive State

The metabolic phase occurring after the complete absorption of a meal, during which the body relies on internal energy reserves.

Blood Glucose Levels

The concentration of glucose in the bloodstream, an essential measurement in the diagnosis and management of diabetes.