You Make the Call-Situation 1

question 21

Essay

You Make the Call-Situation 1
In one small firm, the owner-manager and his management team use various methods to delegate decision making to employees at the operating level. New employees are trained thoroughly when they begin, but no supervisor monitors their work closely once they have learned their duties. Of course, help is available as needed, but no one is there on an hour-to-hour basis to make sure employees are functioning as needed and that they are avoiding mistakes.
Occasionally, all managers and supervisors leave for a day-long meeting and allow the operating employees to run the business by themselves. Job assignments are defined rather loosely. Management expects employees to assume responsibility and to take necessary action whenever they see that something needs to be done. When employees ask for direction, they are sometimes simply told to solve the problem in whatever way they think best.

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Definitions:

Marginal Productivity

The additional output that is produced by adding one more unit of a specific input while holding other inputs constant.

Labor

The combined physical and mental exertion employed in creating goods and services.

Marginal Physical Product

The change in total physical output that results from a one-unit increase in the quantity of one input, holding other inputs constant.

Marginal Revenue Product

The extra income derived from the use of an additional unit of a resource or input in production.