A Manager in Charge of New Product Development Can Hire

question 24

Multiple Choice

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

$\begin{array}{cccc}\text { Engineers }(E) &&\text { Market Researchers }(R) \\&\text { Additional }&&\text { Additional }\\\text { Worker } & \text { NewProducts } & \text { Worker } & \text { NewProducts }\\1^{\text {st }} & 50 & 1^{\text {st }} & 30 \\2^{\text {nd }} & 30 & 2^{\text {nd }} & 25 \\3^{\text {rd }} & 15 & 3^{\text {rd }} & 20 \\4^{\text {th }} & 10 & 4^{\text {th }} & 15 \\5^{\text {th }} & 8 & 5^{\text {th }} & 10\end{array}$
-If the manager currently has two engineers and one market researcher, what must be true?

• A) He is making the correct decision because
• B) He is not making the correct decision because
• C) Fewer new products will be developed if he hires fewer engineers and more market researchers.
• D) More new products will be developed if he hires fewer engineers and more market researchers.

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Definitions:

Stock Repurchase

A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares.

Total Assets

The sum of all current and non-current assets that a company owns, as reflected in its balance sheet.

Owner's Equity

The residual interest in the assets of a company after deducting liabilities.