Recall the Application About Jasper Johns and House Painting to Answer

question 68

Multiple Choice

Recall the Application about Jasper Johns and house painting to answer the following question(s) . In this Application, it is assumed that Johns can earn $5,000 per day by painting works of art, and therefore should hire a house painter who charges $150 per day, and takes 10 days, to paint his house.
-This Application addresses the economic concept of

• A) the marginal principle.
• B) diminishing returns.
• C) specialization and exchange.
• D) real versus nominal costs.

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Definitions:

Average Cost

An alternative term for average total cost; the total cost divided by the quantity of output produced.

Deadweight Loss

A reduction in economic effectiveness that happens when a product or service does not reach, or cannot reach, its equilibrium state.

Average Cost

The total cost of production divided by the number of units produced, indicating the cost per unit.

Consumer Surplus

The bifurcation between what a consumer wishes to pay for a service or good, and what ends up being spent.