A manager in charge of new product development can hire engineers and market res
ID: 1100142 • Letter: A
Question
A manager in charge of new product development can hire engineers and market researchers. The annual salary of an engineer is $30,000 and that of a market researcher is $20,000. The marginal contribution of engineers and market researchers are
Engineers (E)
Market Researchers (R)
Worker
Additional
New Products
Worker
Additional
New Products
1st
50
1st
30
2nd
30
2nd
25
3rd
15
3rd
20
4th
10
4th
15
5th
8
5th
10
He is making the correct decision because MPE = MPR.
He is not making the correct decision because MPE/PE > MPR/PR.
Fewer new products will be developed if he hires fewer engineers and more market researchers.
More new products will be developed if he hires fewer engineers and more market researchers.
Engineers (E)
Market Researchers (R)
Worker
Additional
New Products
Worker
Additional
New Products
1st
50
1st
30
2nd
30
2nd
25
3rd
15
3rd
20
4th
10
4th
15
5th
8
5th
10
Explanation / Answer
He is not making the correct decision because MPE/PE > MPR/PR.
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