Suppose a manager's preferences depend only on profit.Such a manager will then have an indifference curve that
A)is tangent to the profit curve somewhere between quantities of 0 and 2.5.
B)is tangent to the profit curve somewhere between quantities of 2.5 and 5.
C)is tangent to the profit curve at a quantity exactly equal to 2.5.
D)intersects the profit curve at a quantity exactly equal to 5.

Question

Quizplus · Accepted Answer

Since the manager's preferences depend only on profit, the indifference curve will be tangent to the profit curve where profit is maximized. From the given options, the profit curve reaches its maximum value at a quantity of 2.5. Therefore, the indifference curve will be tangent to the profit curve at a quantity exactly equal to 2.5. Hence, the answer is option C.

Suppose a Manager's Preferences Depend Only on Profit