Ned Is Particularly Adept at Designing and Creating New Fashions

question 10

Multiple Choice

Ned is particularly adept at designing and creating new fashions. In which of the following would Ned have the highest level of autonomy?

• A) doing alterations at the dry cleaners
• B) creating custom bridal gowns in a bridal store
• C) creating custom gowns and suits for a pageant
• D) working as a private tailor for a local real estate agent
• E) working as a stylist for a local celebrity

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Definitions:

Long-run Average Total Cost

The average cost per unit of output over the long term, where all inputs are considered variable.

Output Q₀

The quantity of goods or services produced in a given period of time, denoted as Q₀ to specify a particular amount.

Diseconomies of Scale

The phenomenon where, as a firm expands, its costs start increasing per unit of output, usually due to inefficiencies and management challenges that arise with size.

Diminishing Returns

A principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase and may decrease.