Question

Economics assumes firms generally try to maximize profits. This means that profit-maximizing behavior

is good

is bad

is neither good or bad... but is what we should expect

is immoral but to be expected Farmer Brian has 3 acres of land which he farms efficiently. Each acre can support 10 apple trees. However the 3 acres differ in their ability to support orange trees. He can grow 30 orange trees on the best land, 20 orange trees on the ok land, and 10 orange trees on the bad land. If he initially has all is land growing apples, what would be the opportunity cost of growing an orange tree? 1 apple tree 2 apple trees 3 apple trees 1/2 of an apple tree 1/3 of an apple tree 10 apple trees After tracking thousands of babies over time a study found that babies that drink bottled water have better health outcomes than those that drink tap water. This means: We do not know if bottled water is healthier than tap water. Bottled water is healthier for babies than tap water. There is clear causation between baby health and source of water Bottled water is healthier for adults as well as babies

Answer 1

Answer-1 Economics assumes firms generally try to maximize profits. This means that profit-maximizing behaviour is neither good or bad... but is what we should expect.

Firm try maximize their profit. Hence we expect that, we can not say whether it is good or bad.

Answer-2 Farmer Brian has 3 acres of land which he farms efficiently. Each acre can support 10 apple trees. However the 3 acres differ in their ability to support orange trees. He can grow 30 orange trees on the best land, 20 orange trees on the ok land, and 10 orange trees on the bad land.

If he initially has all is land growing apples, what would be the opportunity cost of growing an orange tree? 1/3 of an apple tree.

Answer-3 After tracking thousands of babies over time a study found that babies that drink bottled water have better health outcomes than those that drink tap water. This means We do not know if bottled water is healthier than tap water.

Because correlation is not causation. It can be the case that parents who purchased bottled water were wealthier than those that gave their baby tap water. Increased wealth also comes with better health care. It can be the case that not the bottled water which made the difference. It could be that those babies were born into wealthier families.