Table 7-10 -Refer to Table 7-10.You Want to Hire a Professional Photographer

question 258

Multiple Choice

Table 7-10

-Refer to Table 7-10.You want to hire a professional photographer to take pictures of your family.The table shows the costs of the four potential sellers in the local photography market.You hire Kevin for a price of $500.What is his producer surplus?

• A) $500
• B) $150
• C) $100
• D) $50

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Definitions:

Economies of Scale

Economies of scale refer to the cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale.

Constant Returns to Scale

A situation in production where increasing the inputs exactly proportionally results in an equivalent increase in output.

Economies of Scale

The financial benefits gained by businesses as a result of their operation size, wherein the expense for each unit produced typically drops as the scale expands.

Average Total Costs

The total cost of production divided by the quantity of output produced; it includes both fixed and variable costs.