Table 4-5 -Refer to Table 4-5.The Equations Above Describe the Demand and Describe

question 43

Multiple Choice

Table 4-5

-Refer to Table 4-5.The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick.The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units.What is the value of economic surplus in this market?

• A) $300 thousand
• B) $600 thousand
• C) $1,200 thousand
• D) $1,600 thousand

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Definitions:

Diminishing Returns

The principle stating that if one factor of production is increased while others remain constant, the overall returns will incrementally decrease after a certain point, leading to reduced efficiency.

Decreasing Returns to Scale

A situation in which a proportional increase in all inputs results in a less-than-proportional increase in output.

Cobb-Douglas Production Function

The Cobb-Douglas Production Function is an economic model representing the relationship of an output to inputs, typically showing how labor and capital contribute to the production process in a way that reflects diminishing returns.

Returns to Scale

The rate at which output increases as inputs are increased proportionally in the production process.