Suppose the Utility Function for a Firm Manager Is U

question 78

Multiple Choice

Suppose the utility function for a firm manager is U = π + bQ, where Q is output, π is profit, and b is a negative 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 is correct.

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Definitions:

Case Study

A research method involving an in-depth investigation of a single individual, group, event, or situation to explore underlying principles or phenomena.

Single Individual

Referring to one person, emphasizing the focus on an individual basis rather than a group or collective.

Sociocultural Approach

A psychological perspective that examines how societal and cultural influences affect behavior and mental processes.

Achievement Motivation

The inner drive or pressure to accomplish set goals, pursue excellence, and overcome obstacles.