A Manager in Charge of New Product Development Can Hire

question 102

Multiple Choice

A manager in charge of new product development can hire engineers and market researchers. The annual salary of an engineer is $40,000 while a market researcher receives $20,000. The marginal contribution of engineers and market researchers are:

$\begin{array}{cccc}\text { Engineers }(E) &&\text { Market Researchers }(R) \\& \text { Additional } & & \text { Additional } \\\text { Worker } & \text { NewProducts } & \text { Worker } & \text { NewProducts } \\\hline1^{\text {st }} & 240 & 1^{\text {st }} & 80 \\2^{\text {nd }} & 200 & 2^{\text {nd }} & 70 \\3^{\text {rd }} & 160 & 3^{\text {rd }} & 60 \\4^{\text {th }} & 100 & 4^{\text {th }} & 50 \\5^{\text {th }} & 40 & 5^{\text {th }} & 40\end{array}$
-If the manager has an annual budget of $140,000 and currently is hiring two engineers and three market researchers, then

• A) the last dollar spent on an engineer yielded more new products than the last dollar spent on a market researcher.
• B) the last dollar spent on a market researcher yielded more new products than the last dollar spent on an engineer.
• C) he is making the correct decision because engineers make more than market researchers.
• D) he is making the correct decision because the last market researcher hired was more productive than the last engineer hired.

Understand the concept of utility and how it differs from individual to individual.

Comprehend the relationship between price and utility in consumer decision-making.

Identify and explain marginal utility and how it influences consumer choice.

Distinguish between total utility and marginal utility and their calculation.

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Definitions:

Annual Income

The total earnings or revenue generated by an individual or business in one fiscal year before any deductions.

Capital Projects

Large, long-term investments undertaken to create, expand, or replace a company's physical assets.

Cash Payback Period

The duration it takes for the earnings from an investment to cover the initial amount invested.

Annual Net Cash Flows

The total amount of money, including inflows minus outflows, that a business generates over one year.