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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