Suppose a manager views both quantity and profit as "goods." 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) intersects the profit curve at a quantity exactly equal to 2.5.
D) intersects the profit curve at a quantity exactly equal to 5.

Question

Suppose a manager views both quantity and profit as "goods." 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) intersects the profit curve at a quantity exactly equal to 2.5. 
D) intersects the profit curve at a quantity exactly equal to 5.

Quizplus · Accepted Answer

If the manager values both quantity and profit, they will try to maximize both. Therefore, the indifference curve will be tangent to the profit curve at a point where both are maximized. Looking at the graph, the tangent point between the indifference curve and the profit curve seems to be somewhere between quantities of 2.5 and 5. Therefore, the best choice would be B.

Suppose a Manager Views Both Quantity and Profit as "Goods