Table 13-5
the Following Table Shows the Production and Costs

question 223

Multiple Choice

Table 13-5
The following table shows the production and costs for the Wooden Chair Factory.
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$$\begin{array} { | c | c | c | c | c | c | c | } \hline \begin{array} { c } \text { Labor } \\\text { (Number of } \\\text { workers) }\end{array} & \begin{array} { c } \text { Capital } \\\text { (Number of } \\\text { machines) }\end{array} & \begin{array} { c } \text { Output } \\\text { (Chairs } \\\text { produced per } \\\text { hour) }\end{array} & \begin{array} { c } \text { Marginal } \\\text { Product of } \\\text { Labor } \\\text { (Chairs } \\\text { produced per } \\\text { hour) }\end{array} & \begin{array} { c } \text { Cost of } \\\text { Workers } \\\text { (Dollars) }\end{array} & \begin{array} { c } \text { Cost of } \\\text { Machines } \\\text { (Dollars }\end{array} & \begin{array} { c } \text { Total } \\\text { Cost } \\\text { (Dollars) }\end{array} \\\hline 1 & 2 & 5 & & & & \\\hline 2 & 2 & 10 & & & & \\\hline 3 & 2 & 20 & & & & \\\hline 4 & 2 & 35 & & & & \\\hline 5 & 2 & 55 & & & & \\\hline 6 & 2 & 70 & & & & \\\hline 7 & 2 & 80 & & & & \\\hline\end{array}$$ ​
-Refer to Table 13-5. The Wooden Chair Factory experiences diminishing marginal product of labor with the addition of which worker?

• A)The third worker
• B)The fourth worker
• C)The fifth worker
• D)The sixth worker

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Definitions:

Network Effects

The phenomenon whereby a product or service gains additional value as more people use it.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the average cost per unit of output decreases with increasing scale.

Monopolist

A sole provider of a particular good or service in a market, possessing the power to control prices and exclude competition.

Price Maker

A firm or entity that has significant control over the price of the goods or services it provides, due to lack of competition.